UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549



FORM 20-F



[]

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934



OR



[X]

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013



OR



[   ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to __________



OR



[   ]

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report



Commission File Number:

001-32556



RADIUS GOLD INC.

(Exact name of Registrant as specified in its charter)



British Columbia, Canada

(Jurisdiction of incorporation or organization)



200 Burrard Street, Suite 650, Vancouver, British Columbia, Canada V6C 3L6

(Address of principal executive offices)



Securities to be registered pursuant to Section 12(b) of the Act:



|                    |                                          
|------------------- | -----------------------------------------
|Title of each class | Name on each exchange on which registered
|                    |                                          
|None                | None                                     



Securities to be registered pursuant to Section 12(g) of the Act:



Common Shares, without par value

(Title of Class)



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None



Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report.    86,675,617 Common Shares, no par value



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes ___     No  X



If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.   Yes ___   No  X



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days.          Yes XNo ____



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes ___     No  X



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer.  See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.



Large accelerated filer ___                 Accelerated filer  ___                     Non-accelerated filer  X



Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:



|               |                                                         |           
|-------------- | ------------------------------------------------------- | ----------
|U.S. GAAP [  ] | International Financial Reporting Standards as issued   | Other [  ]
|               | by the International Accounting Standards Board [  X  ] |           



Indicate by check mark which financial statement item the registrant has elected to follow:

Item 17  Item 18 X



If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes     No X   N/A





Index to Exhibits on Page 51









TABLE OF CONTENTS



|          |                                                                              |   
|--------- | ---------------------------------------------------------------------------- | --
|PART 1    |                                                                              | 1 
|Item 1.   | Identity of Directors, Senior Management and Advisors                        | 1 
|Item 2.   | Offer Statistics and Expected Timetable                                      | 1 
|Item 3.   | Key Information                                                              | 1 
|Item 4.   | Information on the Company                                                   | 8 
|Item 5.   | Operating and Financial Review and Prospects                                 | 16
|Item 6.   | Directors, Senior Management and Employees                                   | 27
|Item 7.   | Major Shareholders and Related Party Transactions                            | 35
|Item 8.   | Financial Information                                                        | 37
|Item 9.   | The Offer and Listing                                                        | 37
|Item 10.  | Additional Information                                                       | 39
|Item 11.  | Quantitative and Qualitative Disclosures About Market Risk                   | 47
|Item 12.  | Description of Securities Other than Equity Securities                       | 48
|PART II   |                                                                              | 48
|Item 13.  | Defaults, Dividend Arrearages and Delinquencies                              | 48
|Item 14.  | Material Modifications to the Rights of Security Holders and Use of Proceeds | 48
|Item 15.  | Controls and Procedures                                                      | 48
|Item 16.  | [Reserved]                                                                   | 49
|Item 16A. | Audit Committee Financial Expert                                             | 49
|Item 16B. | Code of Ethics                                                               | 49
|Item 16C. | Principal Accountant Fees and Services                                       | 50
|Item 16D. | Exemptions from the Listing Standards for Audit Committees                   | 50
|Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers       | 50
|Item 16F. | Changes in the Registrants Certifying Accountant                            | 51
|Item 16G. | Corporate Governance                                                         | 51
|Item 16H. | Mine Safety Disclosure                                                       | 51
|PART III  |                                                                              | 51
|Item 17.  | Financial Statements                                                         | 51
|Item 18.  | Financial Statements                                                         | 51
|Item 19.  | Exhibits                                                                     | 51











GLOSSARY OF TECHNICAL TERMS



In this Annual Report, the following technical terms have the following meanings:



|                       |  |                                                                                                                                                                                                                                                                                                                                           
|---------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Ag                     |  | The elemental symbol for silver.                                                                                                                                                                                                                                                                                                          
|                       |  |                                                                                                                                                                                                                                                                                                                                           
|Alteration             |  | The chemical and mineralogical changes in a rock mass resulting from the passage of hydrothermal fluids.                                                                                                                                                                                                                                  
|                       |  |                                                                                                                                                                                                                                                                                                                                           
|Anomalous or anomalies |  | A sample or location in which either (i) the concentration of an element(s) or (ii) geophysical response is significantly different from the average background values that typify an area.                                                                                                                                               
|                       |  |                                                                                                                                                                                                                                                                                                                                           
|Anomaly                |  | The geographical area corresponding to anomalous geochemical or geophysical values.                                                                                                                                                                                                                                                       
|                       |  |                                                                                                                                                                                                                                                                                                                                           
|Arsenopyrite           |  | A sulphide of arsenic and iron.                                                                                                                                                                                                                                                                                                           
|                       |  |                                                                                                                                                                                                                                                                                                                                           
|As                     |  | The elemental symbol for arsenic.                                                                                                                                                                                                                                                                                                         
|                       |  |                                                                                                                                                                                                                                                                                                                                           
|Assay                  |  | An analysis to determine the presence, absence or quantity of one or more elemental components.                                                                                                                                                                                                                                           
|                       |  |                                                                                                                                                                                                                                                                                                                                           
|Au                     |  | The elemental symbol for gold.                                                                                                                                                                                                                                                                                                            
|                       |  |                                                                                                                                                                                                                                                                                                                                           
|Au Eq. g/t             |  | Denotes gold equivalent grades: gold grade plus silver grades which have been converted to gold grades by using a ratio generally based on the prevailing spot prices of gold and silver.                                                                                                                                                 
|                       |  |                                                                                                                                                                                                                                                                                                                                           
|Background             |  | The average concentration of an element or typical geophysical response in an area.                                                                                                                                                                                                                                                       
|                       |  |                                                                                                                                                                                                                                                                                                                                           
|Breccia                |  | A rock consisting of sharp fragments in fine grained material.                                                                                                                                                                                                                                                                            
|                       |  |                                                                                                                                                                                                                                                                                                                                           
|Cretaceous             |  | The geologic period extending from 135 million to 63 million years ago.                                                                                                                                                                                                                                                                   
|                       |  |                                                                                                                                                                                                                                                                                                                                           
|Development            |  | Preparation of a mineral deposit for commercial production including installations of plant and machinery and the construction of all related facilities.                                                                                                                                                                                 
|                       |  |                                                                                                                                                                                                                                                                                                                                           
|Diamond drill          |  | A type of rotary drill in which the cutting is done by abrasion rather than percussion. The cutting bit is set with diamonds and is attached to the end of long hollow rods through which water is pumped to the cutting face. The drill cuts a core of rock which is recovered in long cylindrical sections, an inch or more in diameter.
|                       |  |                                                                                                                                                                                                                                                                                                                                           



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|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|---------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Dip              |  | The angle which a geological structure forms with a horizontal surface, measured perpendicular to the strike of the structure.                                                                                                                                                                                                                                                                        
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|Epithermal       |  | A term applied to high-level hydrothermal systems which form at depths of ~1 km to surficial hotspring settings.                                                                                                                                                                                                                                                                                      
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|Exploration      |  | The prospecting, mapping, sampling, remote sensing, geophysical surveying, diamond drilling and other work involved in the searching for ore bodies.                                                                                                                                                                                                                                                  
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|Fault            |  | A fracture in a rock across which there has been displacement.                                                                                                                                                                                                                                                                                                                                        
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|Fracture         |  | Breaks in a rock, usually planar.                                                                                                                                                                                                                                                                                                                                                                     
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|GPS              |  | Global Positioning System  a space based satellite positioning system whereby receiver units on the ground or in the air use triangulation from known satellite signals to derive a location in three dimensional space.                                                                                                                                                                             
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|Grade            |  | The concentration of an ore metal in a rock sample, given either as weight percent for base metals (e.g. Cu, Zn, Pb) or in grams per tonne (g/t) or ounces per short ton (oz/t) for precious metals. The grade of an ore deposit is calculated, often using sophisticated statistical procedures, as an average of the grades of a very large number of samples collected from throughout the deposit.
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|g/t              |  | Grams of per metric tonne. Usually used in association with gold or silver.                                                                                                                                                                                                                                                                                                                           
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|Heap leach       |  | A process used for the recovery of metals from crushed ore in heaps using a suitable leaching solution.                                                                                                                                                                                                                                                                                               
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|Hectare or ha    |  | An area totaling 10,000 square metres.                                                                                                                                                                                                                                                                                                                                                                
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|Highly anomalous |  | An anomaly which is 50 to 100 times average background.                                                                                                                                                                                                                                                                                                                                               
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|Host rock        |  | The body of rock in which mineralization of economic interest occurs.                                                                                                                                                                                                                                                                                                                                 
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|Hydrothermal     |  | Pertaining to hot fluids, dominantly water, in the earths crust which may carry metals and other compounds in solution to the site of ore deposition or wall rock alteration.                                                                                                                                                                                                                        
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|ICP              |  | A type of assay technique.                                                                                                                                                                                                                                                                                                                                                                            
|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|Intrusive        |  | A rock mass formed below earths surface from magma which has intruded into a preexisting rock mass                                                                                                                                                                                                                                                                                                   



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| | - ii - | 
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|                                                                                                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Mesothermal                                                                                         |  | A hydrothermal ore deposit typically a vein system- formed at intermediate temperatures (200-300oC) and pressures/depths.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Mineral resource,
measured mineral  resource,
indicated mineral resource,
inferred mineral resource |  | Under CIM standards, a mineral resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the earths crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge.

The terms mineral resource, measured mineral resource, indicated mineral resource, and inferred mineral resource used in this Annual Report are mining terms defined under CIM standards and used in accordance with Canadian National Instrument 43-101  Standards of Disclosure for Mineral Projects. They are not defined terms under United States standards and generally may not be used in documents filed with the SEC by U.S. companies.

A mineral resource estimate is based on information on the geology of the deposit and the continuity of mineralization. Assumptions concerning economic and operating parameters,including cut-off grades and economic mining widths, based on factors typical for the type of deposit, may be used if these factors have not been specifically established for the deposit at the time of the mineral resource estimate. A mineral resource is categorized on the basis of the degree of confidence in the estimate of quantity and grade or quality of the deposit, as follows:

Inferred mineral resource:Under CIM standards, an inferred mineral resource is that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

Indicated mineral resource:Under CIM standards, an indicated mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.



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|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                            |  | Measured mineral resource:Under CIM standards, a measured mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Mineralization              |  | Minerals of value occurring in rocks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Mt                          |  | A million tonnes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Ore                         |  | A natural aggregate of one or more minerals which, at a specified time and place may be mined, processed and sold at a profit, or from which some part may profitably be separated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Ounce / oz                  |  | Troy ounce, equal to approximately 31.103 grams.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Outcrop                     |  | An exposure of rock at the earths surface.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Quartz                      |  | A common rock-forming mineral (SiO2) that is frequently a dominant constituent of veins, especially those containing gold and silver mineralization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|RC                          |  | Reverse Circulation drilling.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Rhyolite                    |  | A silica-rich volcanic rock chemically equivalent to granite. Usually light colored, very fine-grained or glassy-looking.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Silicification / silicified |  | Complete or partial replacement of a rock by quartz, often during hydrothermal alteration.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Strike                      |  | Azimuth of a plane surface aligned at right angles to the dip of the plane used to describe the orientation of stratigraphic units or structures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Tertiary                    |  | The geological period extending from the end of the Cretaceous (65 million years ago) to approximately 2 million years before the present time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Tonne                       |  | A metric tonne, 1000 kilograms or 2,204.6 pounds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|UTM                         |  | The UTM (Universal Transverse Mercator) system is a world-wide geographic coordinate system defined in meters.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Vein, Veinlet (small)       |  | A tabular mineral deposit formed within or adjacent to faults or fractures by the deposition of minerals from hydrothermal fluids.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            



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NOTE REGARDING FORWARD-LOOKING STATEMENTS



This Annual Report contains forward-looking statements within the meaning of section 21E of the United States Securities Exchange Act of 1934, as amended (the Exchange Act), which represent expectations or beliefs of the Company about future events. These statements can be identified generally by forward-looking words such as expect, believe, anticipate, plan, intend, estimate, may, will or similar words.  Information concerning the interpretation of drill results and mineral resource estimates also may be deemed to be forward-looking statements, as such information constitutes a prediction of what mineralization might be found to be present if and when a project is actually developed.  Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, those described in Item 3.D. of this Annual Report under the heading, Risk Factors, and elsewhere in this Annual Report.



Some of these risks and assumptions include:



·

completion of environmental review;

·

general economic and business conditions, including changes in exchange rates;

·

prices of natural resources, costs associated with mineral exploration and development, and other economic conditions;

·

natural phenomena;

·

actions by government authorities, including changes in government regulation;

·

uncertainties associated with legal proceedings; and

·

changes in the resources market.



The Companys forward-looking statements contained in this Annual Report are made as of the respective dates set forth in this Annual Report.  Such forward-looking statements are based on the beliefs, expectations and opinions of management as of the date the statements are made.  The Company does not intend to update these forward-looking statements.  For the reasons set forth above, investors should not place undue reliance on forward-looking statements. You should carefully review the cautionary statements and risk factors contained in this and other documents that we file from time to time with the Securities and Exchange Commission (the SEC).



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PART I



Item 1.

Identity of Directors, Senior Management and Advisers.



A.

Directors and Senior Management.



Not Applicable



B.

Advisers.



Not Applicable



C.

Auditors.



Not Applicable



Item 2.

Offer Statistics and Expected Timetable.



Not Applicable



Item 3.

Key Information.



A.

Selected Financial Data.



The following tables set forth and summarize selected consolidated financial data for the Company, prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) for 2013, 2012 and 2011.  The Companys transition date to IFRS was January 1, 2010.  The financial data for dates and periods prior to January 1, 2010 have not been restated.  The consolidated financial statements have been audited by BDO Canada LLP, Chartered Accountants as at and for the years ended December 31, 2013 and 2012 and are reported in Canadian dollars.



The selected financial data should be read in conjunction with Item 5, Operating and Financial Review and Prospects and in conjunction with the Consolidated Financial Statements of the Company and the Notes thereto contained elsewhere in this Annual Report.  The Companys fiscal period ends on December 31 of each year.



The following are summaries of certain selected financial information for the Companys most recently completed fiscal year and the fiscal years ended December 31, 2012, 2011, 2010, and 2009.  The first table is derived from the financial statements of the Company, which have been prepared in accordance with International Financial Reporting Standards (IFRS). The Company adopted IFRS effective January 1, 2010. The second table includes statements for a prior year which were prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP).





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|                                                                            |                                   |                |                |               
|--------------------------------------------------------------------------- | --------------------------------- | -------------- | -------------- | --------------
|IFRS                                                                        | (in 000s, except per share data)
|                                                                            |                                  
|                                                                            | As at
12/31/13                    | As at
12/31/12 | As at
12/31/11 | As at
12/31/10
|Working Capital                                                             | 10,398                            | 17,690         | 3,650          | 8,245         
|Exploration and Evaluation Assets (Mineral Properties)                      | 531                               | 531            | 4,103          | 4,910         
|Long Term Debt                                                              | -                                 | -              | -              | -             
|Shareholders Equity and capital stock                                      | 11,217                            | 18,988         | 9,576          | 13,398        
|Total Assets                                                                | 11,320                            | 19,243         | 10,351         | 14,584        
|                                                                            |                                   |                |                |               
|Revenue                                                                     | -                                 | -              | -              | -             
|Net Income (Loss)                                                           | (8,288)                           | 8,929          | (2,633)        | (4,578)       
|Income (Loss) Per Share                                                     | (0.10)                            | 0.10           | (0.03)         | (0.07)        
|Comprehensive Income (Loss)                                                 | (7,771)                           | 9,026          | (2,001)        | (4,952)       
|Dividends Per Share                                                         | -                                 | -              | -              | -             
|Weighted Average Number of Shares                                           | 86,676                            | 86,676         | 83,232         | 61,530        
|*Correction of error in previously issued consolidated financial statements







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|                                                                  |                                  
|----------------------------------------------------------------- | ---------------------------------
|Canadian GAAP and US GAAP                                         | (in 000s, except per share data)
|                                                                  | As at
12/31/09                   
|Working Capital                                                   | 2,296                            
|Exploration and Evaluation Assets (Mineral Properties) (Cdn GAAP) | 4,294                            
|Exploration and Evaluation Assets (Mineral Properties) (US GAAP)  | 82                               
|Long Term Debt (Cdn GAAP)                                         | (122)                            
|Long Term Debt (US GAAP)                                          | (122)                            
|Shareholders Equity (Cdn GAAP)                                   | (6,674)                          
|Shareholders Equity (US GAAP)                                    | (2,463)                          
|Total Assets (Cdn GAAP)                                           | 7,043                            
|Total Assets (US GAAP)                                            | 2,831                            
|                                                                  |                                  
|Revenue                                                           | -                                
|Net Loss (Cdn GAAP)                                               | (1,211)                          
|Loss Per Share (Cdn GAAP)                                         | (0.02)                           
|Comprehensive Loss (US GAAP)                                      | (31)                             
|Comprehensive Loss (Cdn GAAP)                                     | (255)                            
|Loss Per Share (US GAAP)                                          | (0.00)                           
|Dividends Per Share (Cdn GAAP)                                    | -                                
|Dividends Per Share (US GAAP)                                     | -                                
|Wtd. Avg. No.  Shares (Cdn GAAP)                                  | 53,548                           
|Wtd. Avg. No. Shares (US GAAP)                                    | 53,548                           



Except where otherwise indicated, all information extracted from or based on the Consolidated Financial Statements of the Company are presented in accordance with IFRS.



No dividends have been declared in any of the years presented above.



Exchange Rate Information



In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars.  References in this document to $ and CDN$ refer to Canadian dollars, unless otherwise specified; and references to US$ refer to US dollars.



The following table sets forth the high and low rates of exchange for the Canadian dollar, expressed as Canadian dollars per U.S. dollar, for each month during the previous six months and the average of such exchange rates during the five most recent years ended December 31.  The average rates presented in the table below represent the average of the exchange rates on the last day of each month during a year for the past five fiscal years.  Exchange rates represent the noon buying rate in New York City for cable transfers payable in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.  The noon rate of exchange on April 11, 2014 as set forth in the H.10 statistical release of the Federal Reserve Board, for the conversion of Canadian dollars into United States dollars was US$1.00 = CDN$1.0960.



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|                              |                                                  |       
|----------------------------- | ------------------------------------------------ | ------
|                              | Exchange Rate U.S. Dollars into
Canadian Dollars
|                              | High                                             | Low   
|Month ended March 31, 2014    | 1.1251                                           | 1.0965
|Month ended February 28, 2014 | 1.1137                                           | 1.0979
|Month ended January 31, 2014  | 1.1171                                           | 1.0612
|Month ended December 31, 2013 | 1.0697                                           | 1.0577
|Month ended November 30, 2013 | 1.0597                                           | 1.0414
|Month ended October 31, 2013  | 1.0454                                           | 1.0282



|                                    |        
|----------------------------------- | -------
|                                    | Average
|Fiscal year ended December 31, 2013 | 1.0300 
|Fiscal year ended December 31, 2012 | 0.9994 
|Fiscal year ended December 31, 2011 | 0.9858 
|Fiscal year ended December 31, 2010 | 1.0298 
|Fiscal year ended December 31, 2009 | 1.1373 



The exchange rates set forth above are as set forth in the H.10 statistical release of the Federal Reserve Board.



B.

Capitalization and Indebtedness.



Not Applicable



C.

Reasons for the Offer and Use of Proceeds.



Not Applicable





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D.

Risk Factors.



Mining operations and exploration activities are subject to various federal, state and local laws and regulations.



The mineral projects in which the Company has an interest are located in Guatemala, Nicaragua and Mexico. The Companys operations and exploration activities in these jurisdictions are subject to extensive federal, state, and local laws and regulations governing various matters, including:



·

environment protection;

·

expropriations of property;

·

restrictions on production;

·

exploration and development of mines, production and post-closure reclamation;

·

management and use of toxic substances and explosives;

·

import and export controls;

·

price controls;

·

royalties and taxation;

·

restrictions on repatriation of profits;

·

regulations concerning business dealings with indigenous groups;

·

labour standards and occupational health and safety; and

·

historic and cultural preservation.



Failure to comply with applicable laws and regulations may result in civil or criminal fines or penalties or enforcement actions, including orders issued by regulatory or judicial authorities enjoining or curtailing operations or requiring corrective measures, installation of additional equipment or remedial actions, any of which could result in the Company incurring significant expenditures. The Company may also be required to compensate private parties suffering loss or damage by reason of a breach of such laws, regulations or permitting requirements. Any changes in regulations or shifts in political conditions are beyond the control of the Company and may adversely affect its business. It is possible that future laws and regulations, amendments to existing laws and regulations, or a more stringent enforcement of current laws and regulations by governmental authorities, could cause additional expense, capital expenditures, restrictions on or suspensions of our operations and delays in the development of the Companys properties.



The mining industry involves substantial risks and there is no assurance that the business of the Company will achieve profitable operations.



Few properties that are explored are ultimately developed into producing mines.  At present, there are no known bodies of commercial ore on any of the Companys properties and the proposed exploration programs are an exploratory search for ore.  At December 31, 2013, the Company had not yet achieved profitable operations, has accumulated losses since inception, and is expected to incur further losses in the development of its business.



Risks involved in the conduct of exploration programs include unusual or unexpected formation, formation pressures, fires, power outages, labour disruptions, flooding, explorations, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labour.  Although the management of the Company has experience in the exploration and development of mineral properties, it has relied on and may continue to rely upon consultants and others for exploration and operating expertise.  The economics of developing mineral properties is affected by many factors including the cost of operations, variation of the grade of minerals mined and fluctuations in the price of any minerals produced.





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The Company is dependent on public and private distributions of equity to obtain capital in order to sustain operations.



The Company has depended on financing in order to conduct its planned work programs on mineral properties, meet its ongoing levels of corporate overhead and discharge its liabilities as they come due.  While the Company has been successful in securing financings in the past, there can be no assurance that the Company will be able to obtain adequate financing in the future or that the terms of such financing will be favourable.  Failure to obtain such additional financing could result in delay or indefinite postponement of further exploration and development of its projects with the possible loss of such properties.



Dilution from further equity financing.



If the Company raises additional funding by issuing additional equity securities, such financing may substantially dilute the interests of existing shareholders of the Company and reduce the value of their investment.



Operating hazards and risks associated with the mining industry could result in the Company having to significantly reduce or cease operations.



Hazards such as unusual or unexpected formations and other conditions are involved in mineral exploration and development.  The Company may become subject to liability for pollution, cave-ins or hazards against which it cannot insure or against which it may elect not to insure.  The payment of such liabilities may have a material, adverse effect on the Companys financial position.



Title to mineral properties is not guaranteed and could result in future claims against the Company.



While the Company has obtained the usual industry standard title reports with respect to its properties which confirms ownership and that there are no registered encumbrances against the properties, this should not be construed as a guarantee of title.  The properties may be subject to prior unregistered agreements or transfers and title may be affected by undetected defects or native land claims.



Permits and licenses may be required in order to carry out business activities.



The operations of the Company may require licenses and permits from various governmental authorities.  There can be no assurance that the Company will be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and mining  operations at its projects.



The Company may be adversely affected by metal prices.



Even if the Companys exploration programs are successful, factors beyond the control of the Company may affect the marketability of any metals discovered.  Metal prices have historically fluctuated widely and are affected by numerous factors beyond the Companys control, including international, economic and political trends, expectations for inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns, speculative activities and worldwide production levels.  The effect of these factors cannot accurately be predicted.





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The Companys financial position and its ability to finance may be adversely affected by fluctuations in securities markets.



The Company has no source of operating cash flow and has no assurance that additional funding will be available to it for further exploration and development of its projects.  Further exploration and development of one or more of the Companys projects may be dependent upon the Companys ability to obtain financing through equity or debt financing or other means.



Securities markets have at times in the past experienced a high degree of price and volume volatility, and the market price of securities of many companies, particularly those considered to be exploration stage companies such as the Company, have experienced wide fluctuations in share prices which have not necessarily been related to their operating performance, underlying asset values or prospects.  There can be no assurance that these kinds of share price fluctuations will not occur in the future, and if they do occur, they may negatively impact the Companys ability to raise additional funds through equity issues, or the Companys financial position by devaluing the Companys available-for-sale investments.



The Company may not be able to compete with current and potential exploration companies.



The mineral exploration and mining industry is intensely competitive in all its phases. The Company competes with many companies possessing greater financial resources and technical facilities than itself for the acquisition of mineral interests as well as for the recruitment and retention of qualified employees.



It may be difficult for United States investors to effect services of process against the Company.



The Company is incorporated under the laws of the Province of British Columbia, Canada.  Consequently, it will be difficult for United States investors to affect service of process in the United States upon the directors or officers of the Company, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under the United States Securities Exchange Act of 1934, as amended.  The majority of the Companys directors and officers are residents of Canada and all of the Companys assets are located outside of the United States.  A judgment of a United States court predicated solely upon such civil liabilities would probably be enforceable in Canada by a Canadian court if the United States court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter.  There is substantial doubt whether an original action could be brought successfully in Canada against any of such persons or the Company predicated solely upon such civil liabilities.





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Item 4.

Information on the Company.



A.

History and Development of the Company



The Company was incorporated under the name Radius Explorations Ltd. on September 9, 1997 pursuant to the British Columbia Company Act by registration of its Memorandum and Articles.  On July 1, 2004, the Company and PilaGold Inc. amalgamated (the Amalgamation) under the British Columbia Business Corporations Act by registration of a Notice of Articles with the new name Radius Gold Inc..  The Companys registered address is 200 Burrard Street, Suite 650, Vancouver, BC, V6C 3L6 (tel:  604-801-5432).  See Item 4D, Property, Plant and Equipment, for information regarding capital expenditures made by the Company on its properties.



B.

Business Overview



The Company is a natural resource property exploration company in the exploration stage with no history of cash flows from operations.  In 2009, the Company optioned out its Nicaragua portfolio of properties and its property in Mexico.  In 2009 and 2010, the Company acquired a significant land position in the Yukon Territory, Canada by staking and pursuant to option agreements. Also in 2010, the Company made applications for geothermal provisional land use permits in Guatemala.



On December 8, 2011, the Company completed a spin-out transaction (the Spin-Out) whereby the Company transferred all of its Yukon and Alaskan property assets, certain marketable securities, and $1.0 million in cash to a newly formed company called Rackla Metals Inc. (Rackla) in return for Rackla shares and warrants.  (See Item 5, Strategic Transactions below).



In 2012, the Company sold its interest in the Tambor Project, Guatemala, and the majority of its Nicaragua properties pursuant to the following transactions:



Sale of Tambor Project, Guatemala



In August 2012, the Company sold its remaining interest in its subsidiary, Exploraciones Mineras de Guatemala S.A., which holds the Tambor gold project to Kappes, Cassiday & Associates (KCA), giving KCA a 100% interest in the project.  In consideration, KCA agreed to repay approximately US$400,000 owing to the Company (US$100,000 paid upon signing and approximately US$300,000 if and when KCA has commenced shipment of gold produced from the property).  Also upon commercial production, KCA will make quarterly payments to the Company based on the then price of gold and the number of ounces produced from the property.



Sale of Nicaragua Assets



In the first quarter of 2012, B2Gold Corp. (B2Gold) had exercised its option to acquire a 60% interest in the Companys entire Nicaragua mineral property portfolio.  On April 5, 2012, the Company and B2Gold entered into a letter of intent pursuant to which B2Gold agreed to acquire a 100% interest in the Trebol and Pavon properties in consideration of $20 million, payable in common shares of B2Gold at a price per share equal to the volume weighted average price of B2Golds common shares on the Toronto Stock Exchange for the ten trading days immediately preceding the date of the letter agreement. In addition, B2Gold agreed to make contingent payments to the Company of US$10 per ounce of gold on 40% of any proven and probable mineral reserves in excess of 500,000 ounces which might be outlined in the future at Trebol (on a 100% basis).





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The property sale was completed in August 2012, and in consideration therefor, the Company was issued 4,815,894 common shares of B2Gold with a fair value at that time of $16,662,993.  A separate agreement was also signed covering the future contingent payments on the Trebol property.  B2Gold and the Company also entered into joint venture agreements on 60% - 40% basis with respect to the Companys San Jose and B2Golds La Magnolia properties in Nicaragua.



In late 2013, an agreement was reached whereby the Company will sell to B2Gold its 40% interest in the San Jose and La Magnolia properties in consideration of a 2% NSR royalty on each property.  B2Gold will have the right to purchase one-half of each royalty for US$1.0 million.  This agreement has not yet been signed.



Currently, the Company holds interests in properties in Guatemala, Nicaragua and Mexico.  (See Property and Equipment, below, and Note 9 to the Financial Statements).



The Company is in the exploration stage and its properties do not contain a known commercially viable minable deposit.  There is no assurance that a commercially viable mineral deposit exists on any of the Companys properties, and further exploration is required before a final evaluation of the economic and legal feasibility is determined.



C.

Organizational Structure



The following table sets forth the name of each material subsidiary of the Company, the jurisdiction of its incorporation and the direct or indirect percentage ownership by the Company of such subsidiary.



|                               |                       |              |                 
|------------------------------ | --------------------- | ------------ | ----------------
|Name                           | Date of
Incorporation | Jurisdiction | Percentage
Owned
|Minerales Sierra Pacifico S.A. | November 17, 1999     | Guatemala    | 100%            
|Minerales de Nicaragua S.A.    | November 18, 2002     | Nicaragua    | 100%            
|Geometales Del Norte-Geonorte  | May 2, 2005           | Mexico       | 100%            
|Radius (Cayman) Inc.           | January 31, 2005      | Cayman Isl.  | 100%            



D.

Property and Equipment



During 2013, the Company held interests in properties in Guatemala, Nicaragua and Mexico, as set out in the following map and more particularly described below:





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[radius2013_form20fannual001.jpg]

Guatemala



In Guatemala, exploration concessions are granted for an initial period of three years.  Thereafter, an extension of two years may be obtained, and then a final extension of two years, for a total of seven years. Thereafter, the concession is either converted to an exploitation concession, or forfeited.



In order to keep its properties in Guatemala in good standing, the Company would have to pay filing fees to the Guatemala government, paid annually in advance, equal to US$384,60 per square kilometer (100 hectares), or fraction thereof, for the first three years after the granting of an exploration concession, and US$769.20 per square kilometer, or fraction thereof, for the fourth and fifth years, if so extended, and US$1,153.80 per square kilometer, or fraction thereof, for the sixth and seventh years, if so extended.  For exploitation concessions, an annual fee of US$1,550.82 per square kilometer is required.  The Company would have to also file annual exploration reports.



The Companys currently held properties in Guatemala are set out below:



1.

Southeastern Guatemala



As at April 11, 2014, the Company holds a 100% interest in 34 concessions (one reconnaissance application, three exploitation applications, and 30 exploration applications) located in southeastern Guatemala, as follows:





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|                |                 |                                                
|--------------- | --------------- | -----------------------------------------------
|Concession Name | Size (Hectares) | Expiry Date / Application Date                 
|La Luz          | 2,000.00        | Exploitation licence applied for June 21, 2011 
|Aurora          | 2,000.00        | Exploitation licence applied for June 21, 2011 
|El Dorado II    | 2,000.00        | Exploitation licence applied for June 21, 2011 
|Joyita          | 1,271.43        | Exploration licence applied for Sept. 9, 2008  
|Marisol I       | 3,407.02        | Exploration licence applied for Feb. 3, 2010   
|Marisol II      | 2,772.33        | Exploration licence applied for Feb. 3, 2010   
|CECI            | 3,044.67        | Exploration licence applied for Feb. 3, 2010   
|Cirilo I        | 1,350.00        | Exploration licence applied for March 18, 2010 
|Cirilo II       | 320.00          | Exploration licence applied for March 18, 2010 
|Salvador I      | 6,195.57        | Exploration licence applied for March 18, 2010 
|Frida           | 7,133.92        | Exploration licence applied for May 12, 2010   
|Belen           | 7,372.28        | Exploration licence applied for May 12, 2010   
|Paola           | 9,956.11        | Exploration licence applied for May 12, 2010   
|El Caminero     | 9,322.38        | Exploration licence applied for May 12, 2010   
|Eliza           | 62,215.63       | Reconnaissance licence applied for May 27, 2010
|Carolina        | 9,806.80        | Exploration licence applied for June 11, 2010  
|Conchita        | 8,579.55        | Exploration licence applied for June 11, 2010  
|La Pena         | 8,037.73        | Exploration licence applied for June 11, 2010  
|Karen           | 6,838.01        | Exploration licence applied for June 11, 2010  
|Juanita         | 5,167.80        | Exploration licence applied for July 13, 2010  
|Las Pomas       | 6,124.30        | Exploration licence applied for Feb. 23, 2011  
|El Arco         | 169.92          | Exploration licence applied for April 15, 2011 
|El Muro         | 514.50          | Exploration licence applied for April 15, 2011 
|La Tuna         | 8,404.60        | Exploration licence applied for March 27, 2012 
|Pitaya          | 8,664.02        | Exploration licence applied for March 27, 2012 
|Fedora          | 3,324.99        | Exploration licence applied for June 11, 2012  
|Arabel          | 4,650.00        | Exploration licence applied for August 8, 2012 
|Arely           | 4,850.00        | Exploration licence applied for August 8, 2012 
|Azafran         | 7,990.00        | Exploration licence applied for August 10, 2012
|Scarlett        | 5,350.00        | Exploration licence applied for August 13, 2012
|Alcea           | 8,940.00        | Exploration licence applied for Sept. 10, 2012 
|La Regia        | 5,629.50        | Exploration licence applied for March 11, 2013 
|Guirnalda       | 3,882.70        | Exploration licence applied for March 12, 2013 
|Tulipan         | 3,202.75        | Exploration licence applied for March 25, 2013 
|                | 230,488.52      |                                                



The three exploitation applications were filed in order to convert one previously granted exploration licence to exploitation; until the exploitation licences are issued, the granted exploration licence remains in place.



The majority of these concessions lie within extensive hydrothermal fields in Tertiary volcanic and sedimentary rocks in southeastern Guatemala which host both Escobal, Tahoe Resources Inc.s mesothermal Ag-Au-Pb-Zn deposit and Cerro Blanco, Goldcorp Inc.s hot-spring epithermal Au-Ag deposit.  The hydrothermal field is a product of Tertiary to Quaternary-aged extension tectonics related to the Jocotan, Motagua, and Polochic continental wrench faults and their associated structures.





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Pyramid Hill, M28, and Holly Prospects



In April 2010, the Company commenced a reactivation of its exploration efforts at these prospects (these collectively have been previously referred to as the Holly-Banderas property).  The Company discovered and drilled these gold-silver occurrences between 2002 and 2004 when gold and silver spot prices were close to their record lows.  However, the recent discovery of the world-class Escobal deposit some 70 km west of these prospects underscores the potential of the district and has led the Companys technical team to review the geology and the results obtained by the previous work.



The Pyramid Hill prospect is a northwest-trending, subvertical brittle fault with associated mineralized cataclastic breccias and veins.  The extent of mineralization has been mapped to over 2 km in strike length. Less than 500 meters northeast of Pyramid Hill, the M28 zone consists of a series of stacked southwest dipping hydrothermal quartz veins offset by late normal block faulting.  Drilling highlights from previous early work programs on these zones include 2.2m of 6.9 ppm Au and 261 ppm Ag in hole BDD-014 at Pyramid Hill, and 4.3m of 6.0 ppm Au and 72 ppm Ag in hole BDD-04 at M28 (for full drill results from these drill campaigns (see Radius news release dated April 13, 2004).



The Holly zone is spatially associated with the east-west trending Jocotan continental wrench fault, approximately 9 km west-northwest of the Pyramid Hill prospect.  Previous drilling returned results of up to 14.2 meters of 4.14 ppm Au and 150 ppm Ag in hole HDD-001, and 9 meters of 1.84 ppm Au and 45 ppm Ag in hole HDD-007 (see Radius Explorations Ltd. news release from December 17, 2002).  Mineralization occurs in association with epithermal quartz and quartz-hematite veins within the Jocotan fault conglomerates and basinal sediments as well as in the metamorphic phyllites to the north of the fault, although only the former have been drill tested.



Recent prospecting at the Holly zone has led to the discovery of hydrothermal quartz veins (El Pino and La Peña occurrences) hosted in the metamorphic rocks to the north of the Jocotan fault, bearing grades of up to 58 ppm Au and 1937 ppm Ag over 5.1 meters in surface trenching (see Radius news release of May 16, 2011).  The metamorphic rocks north of the Jocotan fault were not previously believed to be a likely host for epithermal mineralization, and this discovery opens up the area to significant further exploration.



Previous drilling on the Pyramid Hill, M28, and Holly prospects only tested the epithermal systems to relatively shallow depths, generally less than 150 meters below surface.  In contrast, the metal-productive depths of most low-sulphidation epithermal systems is generally thought to be 200 to 600 meters below the hydrothermal systems water table, indicating that the present drilling does not adequately test the mineralization system.  Upon review, and with the present gold and silver prices in mind, management feels that these prospects warrant significant deeper drilling to comprehensively test the potential metal-productive zones of these prospects.



El Zapote Prospects



The El Zapote Zone is located approximately 1 km southwest of the Pyramid Hill zone (see Radius news release dated February 3, 2011), and consists of a northwest-trending stockwork zone exposed along a ridge and a southwest-facing cliff.  The stockwork zone consists of centimetre-scale epithermal quartz-chalcedony veins and veinlets hosted in felsic volcanic and volcaniclastic rocks.  The general orientation, nature of the mineralization, and spatial proximity suggests it is part of the same epithermal ore system as Pyramid Hill and M28 zones.





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Anomalous gold and silver mineralization has been detected in rock and soil samples obtained by the Company over more than 600m strike length, and reconnaissance soil sampling indicates that the zone may extend for up to 3 km in total. 250 samples, a mix of outcrop and float, were collected across a 500 x 300 meter area trending northwest along the exposed southwest facing cliff.  The samples returned gold values ranging from trace to 6.06 ppm Au, and averaged 0.94 ppm Au.  Of the samples taken, 55% graded > 0.5 ppm Au, including 25% samples grading > 1 ppm Au.



Future Work



As a result of continued uncertainty surrounding the granting of both exploration and exploitation concessions in Guatemala, and a general increase in the level of anti-mining activism in many parts of the country, the Company ceased its ongoing exploration activities in the country in late 2013. Management will reassess the Companys plans for this country on a regular basis and exploration activities may be ramped back up if the mining investment climate improves.



All work at the southeastern Guatemala concessions has been funded from the Companys existing cash resources, and the work is supervised by the Companys Exploration Manager.  No Resource or Reserve has been defined within the southeastern Guatemala concessions.



2.

Tambor Project



The Tambor Project consists of six concessions located in south-central Guatemala.



In June 2008, the Company granted to KCA the right to earn a 51% interest in the Tambor Project by spending a total of US$6.5M on the property within 4 years through staged annual expenditure commitments, or by putting the property into commercial production within 4 years.



As set out in Item 4.B above, the Company sold its interest in the Tambor Project to KCA in August 2012.



3.

Geothermal Licences



The Company has revisited its hot spring database for Guatemala and in June 2010 submitted applications for Provisional Use Permits for a number of active geothermal systems that may have potential as geothermal resources for power generation.  A Provisional Use Permit was granted on 15,300 hectares.  After seeking without success for a joint venture partner to further develop these geothermal systems, by November 2013 the Company allowed all applications and permits to lapse.



Nicaragua



Transactions with B2Gold Corp.



In June 2009, the Company granted to B2Gold Corp. (B2Gold) an option (the Option) to acquire an interest in the Companys entire Nicaragua mineral property portfolio.  In April 2012, prior to B2Gold having exercised such option, Radius and B2Gold entered into a binding letter agreement pursuant to which B2Gold agreed to acquire a 100% interest in the Trebol and Pavon properties (other than the San Jose concession) in consideration of $20 million, payable in common shares of B2Gold at a price per share equal to the volume weighted average price of B2Golds common shares on the Toronto Stock Exchange for the ten trading days immediately preceding the date of the letter agreement. In addition, B2Gold agreed to make contingent payments to Radius of US$10 per ounce of gold on 40% of any proven and probable mineral reserves in excess of 500,000 ounces (on a 100% basis).  All aspects of the existing option and joint venture arrangements were terminated.



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The property sale transaction was completed on August 10, 2012 pursuant to which the Company received 4,815,894 common shares of B2Gold.  In addition, B2Gold and the Company entered into a joint venture agreement with respect to each of the Companys San Jose and B2Golds La Magnolia properties in Nicaragua to jointly explore the properties with B2Gold and the Company owning 60% and 40% respectively, of the rights and obligations of each joint venture.



In late 2013, an agreement was reached whereby the Company will sell to B2Gold its 40% interest in the San Jose and La Magnolia properties in consideration of a 2% NSR royalty on each property.  B2Gold will have the right to purchase one-half of each royalty for US$1.0 million. This agreement has not yet been formalized.



No proven and probable mineral reserves or resources have been defined within the Trebol, Natividad, San Jose or La Magnolia properties.



Mexico



1.

Tlacolula Property



The Tlacolula Property consists of one granted exploration concession, described as follows:



|                      |                 |                  
|--------------------- | --------------- | -----------------
|Name                  | Size (Hectares) | Expiry Date      
|Reduccion Tlacolula 2 | 12,642          | November 21, 2057



The Company discovered silver mineralization in 2005 following a regional stream geochemical survey in various areas of the state of Oaxaca.  The Tlacolula Property is located 14 km east-southeast of the city of Oaxaca and 30 km northeast of the San Jose silver-gold mine owned by Fortuna Silver Mines Inc. (Fortuna).  An initial trenching program on the Tlacolula property defined a broad low grade silver/gold anomaly associated with opaline silica, indicating a high level system.



By an agreement signed in September 2009 and amended in December 2012, the Company optioned the Tlacolula silver project to Fortuna which can earn a 60% interest by spending US$2-million on exploration, which is to include at least 1,500 metres of drilling, and making staged annual payments to the Company totalling US$250,000 cash and US$250,000 in common shares, by January 31, 2015.  To date, the Company has received US$150,000 cash and 34,589 shares of Fortuna, of which US$50,000 cash and 11,415 shares were received during fiscal 2013.  The Company and Fortuna have certain directors in common.



No Resource or Reserve has been defined within the Tlacolula Property.





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2.

Santa Brigida



In February 2013, the Company was granted an option to acquire a 100% interest in the Santa Brígida project, a 10,800 hectare property which hosts a low-sulphidation, epithermal silver-gold vein system located approximately 80 km ENE of the city of Guanajuato in Mexico.



An IP-resistivity survey was designed and completed over the southeastern strike extension of the Santa Brígida and Pozos vein systems, to explore for Ag-Au mineralization under soil and caliche cover. The survey defined a number of resistivity and IP targets which were interpreted as possible manifestations of quartz vein under cover. A first phase, 8-hole drill program was designed to test the highest priority geophysical targets. After a review of the results of the first three diamond drill holes (totaling 656 linear metres), in which no significant previous metal concentrations were intersected, the Company ceased drilling operations and has dropped its purchase option on the property.



All work at the Santa Brigida project was funded from the Companys existing cash resources, and the work was supervised by the Companys Exploration Manager.  No Resource or Reserve has been defined within the Santa Brigida project.





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Item 5.

Operating and Financial Review and Prospects



Overview



At the date of this Annual Report, the Company has not been able to identify a known body of commercial grade ore on any of its properties, and the ability of the Company to realize the costs it has incurred to date on these properties is dependent upon the Company being able to identify a commercial ore body, to finance its exploration costs and to resolve any environmental, regulatory or other constraints which may hinder the successful development of the property, or being able to realize the costs incurred on a subsequent disposal of the property.



The following discussion and analysis of the financial condition and operating results of the Company for the two years ended December 31, 2013 and 2012 should be read in conjunction with the Consolidated Financial Statements and related notes to the financial statements which have been prepared in accordance with IFRS.  The discussion and analysis set forth below covers the results measured under IFRS.



Strategic Transactions



In 2004, Radius Explorations Ltd. and PilaGold Inc. amalgamated (the Amalgamation) and continued as one company, Radius Gold Inc., pursuant to the provisions of the British Columbia Business Corporations Act.  The holders of Radius Explorations shares received one (1) Radius Gold share for every one (1) Radius Explorations share held, and PilaGold shareholders received one (1) Radius Gold share for every two and one-quarter (2.25) PilaGold shares held.



Pursuant to an Arrangement Agreement dated November 3, 2011, and effective December 8, 2011, the Company completed the Spin-Out whereby the Company transferred all of its Yukon and Alaskan property assets, certain marketable securities, and $1.0 million in cash to Rackla in return for Rackla shares and warrants, the majority of which were distributed to the Companys shareholders by way of a plan of arrangement.



The objective of the Spin-Out was to maximize shareholder value by allowing the market to independently value geographically separate property portfolios.  The Spin-Out resulted in two strategically positioned companies, one focused on Latin America and the other focused on the Yukon.



A.

Operating Results



Compliance



The Companys consolidated financial statements of the Company as at and for the years ended December 31, 2013 and 2012 have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB).  The Companys transition date to IFRS was January 1, 2010, having previously prepared its consolidated financial statements in accordance with pre-changeover Canadian GAAP.





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Critical Accounting Policies



Investment in Associate



Where the Company has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate.  Associates are initially recognized in the consolidated statement of financial position at cost.  The Company's share of post-acquisition profits and losses is recognized in the consolidated statement of comprehensive income, except that losses in excess of the Companys investment in the associate are not recognized unless there is an obligation to make good those losses.



Profits and losses arising on transactions between the Company and its associates are recognized only to the extent of unrelated investors' interests in the associate.  The investor's share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the associate.



Any premium paid for an associate above the fair value of the Company's share of the identifiable assets, liabilities and contingent liabilities acquired is capitalized and included in the carrying amount of the associate. Where there is objective evidence that the investment in an associate has been impaired the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.



Mineral Exploration and Evaluation Expenditures



Acquisition costs for exploration and evaluation assets are capitalized and include the cash consideration paid and the fair value of common shares issued on acquisition, based on the trading price of the shares on the date of the agreement to issue the shares.  Exploration expenditures, net of recoveries, are charged to operations as incurred.  After a property is determined by management to be commercially feasible, exploration and development expenditures on the property will be capitalized. On transfer to development properties, capitalized exploration and evaluation assets are assessed for impairment.



Options are exercisable entirely at the discretion of the optionee and amounts received from optionees in connection with option agreements are credited against the capitalized acquisition costs classified as exploration and evaluation assets on the balance sheet and amounts received in excess are credited to gain from exploration and evaluation asset option agreements on the statement of operations.



Where the Company has entered into option agreements to acquire interests in exploration and evaluation assets that provide for periodic payments or periodic share issuances, amounts unpaid and unissued are not recorded as liabilities since they are payable and issuable entirely at the Companys option. Option payments are recorded as exploration and evaluation costs when the payments are made or received and the share issuances are recorded as exploration and evaluation costs using the fair market value of the Companys common shares at the earlier of the date the counterpartys performance is complete or the issuance date.





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The Company is in the process of exploring and developing its exploration and evaluation assets and has not yet determined the amount of reserves available.  Management reviews the carrying value of exploration and evaluation assets on a periodic basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable will recognize impairment in value based upon current exploration results, the prospect of further work being carried out by the Company, the assessment of future probability of profitable revenues from the asset or from the sale of the asset.  Amounts shown for exploration and evaluation assets represent costs incurred net of write-downs and recoveries, and are not intended to represent present or future values.



Environmental expenditures that relate to current operations are expensed or capitalized as appropriate.  Expenditures that relate to an existing condition caused by past operations and which do not contribute to current or future revenue generation are expensed.  Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the costs can be reasonably estimated.  Generally, the timing of these accruals would be when the actual environmental disturbance occurs.



Share-based payments



Where equity-settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the statement of comprehensive loss/income over the vesting period.  Performance vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options that eventually vest.  As long as all other vesting conditions are satisfied, a charge is made irrespective of whether these vesting conditions are satisfied.  The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.



Where terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the statements of comprehensive loss/income over the remaining vesting period.



Where equity instruments are granted to employees, they are recorded at the fair value of the equity instrument granted at the grant date.  The grant date fair value is recognized in comprehensive loss/income over the vesting period, described as the period during which all the vesting conditions are to be satisfied.



Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received in the statement of comprehensive loss/income.  Options or warrants granted related to the issuance of shares are recorded as a reduction of share capital.



When the value of goods or services received in exchange for the share-based payment cannot be reliably estimated, the fair value is measured by use of a valuation model or the fair value of the shares granted.



All equity-settled share-based payments are reflected in other equity reserve, until exercised.  Upon exercise, shares are issued from treasury and the amount reflected in other equity reserve is credited to share capital, adjusted for any consideration paid.





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Where a grant of options is cancelled or settled during the vesting period, excluding forfeitures when vesting conditions are not satisfied, the Company immediately accounts for the cancellation as an acceleration of vesting and recognized the amount that otherwise would have been recognized for services received over the remainder of the vesting period.  Any payment made to the employee on the cancellation is accounted for as the repurchase of an equity interest except to the extent the payment exceeds the fair value of the equity instrument granted, measured at the repurchase date.  Any such excess is recognized as an expense.



Impairment of Non-Financial Assets



Impairment tests on non-financial assets, including exploration and evaluation assets are undertaken whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount, which is the higher of value in use and fair value less costs to sell, the asset is written down accordingly.



Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the assets cash-generating unit, which is the lowest group of assets in which the asset belongs for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets.



An impairment loss is charged to the profit or loss, except to the extent they reverse gains previously recognized in other comprehensive loss/income.



Financial Instruments



Financial Assets



Financial assets are classified into one of the following categories based on the purpose for which the asset was acquired.  All transactions related to financial instruments are recorded on a trade date basis.  The Companys accounting policy for each category is as follows:



Loans and Receivables



These assets are non-derivative financial assets resulting from the delivery of cash or other assets by a lender to a borrower in return for a promise to repay on a specified date or dates, or on demand.  They are initially recognized at fair value plus transaction costs that are directly attributable to their acquisition or issue and subsequently carried at amortized cost, using the effective interest rate method, less any impairment losses. Amortized cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transactions costs. Gains or losses are recognized in the profit or loss when the loans and receivables are derecognized or impaired, as well as through the amortization process.



TheCompanys loans and receivables comprise advances and other receivables, due from related parties, deposits and cash and cash equivalents in the consolidated statement of financial position.





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Available-For-Sale Investments



Non-derivative financial assets not included in the other categories are classified as available-for-sale and comprise principally the Companys strategic investments in entities not qualifying as subsidiaries or associates.  Available-for-sale investments are carried at fair value with changes in fair value recognized in accumulated other comprehensive loss/income. Where there is a significant or prolonged decline in the fair value of an available-for-sale financial asset (which constitutes objective evidence of impairment), the full amount of the impairment, including any amount previously recognized in other comprehensive loss/income, is recognized in profit or loss. Any subsequent increases in the fair value of available-for-sale investments are recorded through other comprehensive income. If there is no quoted market price in an active market and fair value cannot be readily determined, available-for-sale investments are carried at cost.



Purchases and sales of available-for-sale financial assets are recognized on a trade date basis. On sale or impairment, the cumulative amount recognized in other comprehensive loss/income is reclassified from accumulated other comprehensive loss/income to profit or loss.



Impairment of Financial Assets



At each reporting date the Company assesses whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or group of financial assets is deemed to be impaired, if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset and that event has an impact on the estimated future cash flows of the financial asset or group of financial assets.



Financial Liabilities



Financial liabilities are classified as other financial liabilities, based on the purpose for which the liability was incurred, and comprise trade payables and accrued liabilities. These liabilities are initially recognized at fair value net of any transaction costs directly attributable to the issuance of the instrument and subsequently carried at amortized cost using the effective interest rate method.  This ensures that any interest expense over the period of repayment is at a constant rate on the balance of the liability carried in the statement of financial position.  Interest expense, in this context, includes initial transaction costs and premiums payable on redemption, as well as any interest or coupon payable while the liability is outstanding.



Trade and other payables represent liabilities for goods and services provided to the Company prior to the end of the period which are unpaid. Trade payable amounts are unsecured and are usually paid within forty-five days of recognition.



Critical Accounting Estimates and Judgments



The Company makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.  In the future, actual experience may differ from these estimates and assumptions.



The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive income in the period of the change, if the change affects that period only, or in the period of the change and future periods, if the change affects both.





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The key areas of judgment applied in the preparation of the consolidated financial statements that could result in a material adjustment to the carrying amounts of assets and liabilities are as follows:



a)

Where the Company holds less than 20% of the voting rights in an investment but the Company has the power to exercise significant influence through common officers and board members, such an investment is treated as an associate. The Company can exercise significant influence over Rackla Metals Inc;



b)

The determination of when an investment is impaired requires significant judgment. In making this judgment, the Company evaluates, amongst other things, the duration and extent to which the fair value of the investment is less that its original cost at each reporting period;



c)

Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Companys title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects; and



d)

The application of the Companys accounting policy for exploration and evaluation expenditure requires judgment in determining whether it is likely that future economic benefits will flow to the Company.



If, after exploration and evaluation expenditure is capitalized, information becomes available suggesting that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount, the Company carries out an impairment test at the cash generating unit or group of cash generating units level in the year the new information becomes available.



The key estimate applied in the preparation of the consolidated financial statements that could result in a material adjustment to the carrying amounts of assets and liabilities are as follows:



a)

The Company is subject to income tax in several jurisdictions and significant judgment is required in determining the provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, the company recognizes tax liabilities based on estimates of whether additional taxes and interest will be due. These tax liabilities are recognized when, despite the company's belief that its tax return positions are supportable, the company believes that certain positions are likely to be challenged and may not be fully sustained upon review by tax authorities. The company believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law.  This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact income tax expense in the period in which such determination is made.



b)

Option pricing models require the input of highly subjective assumptions, including the expected price volatility and options expected life. Changes in these assumptions can materially affect the fair value estimate and, therefore, the existing models do not necessarily provide a reliable single measure of the fair value of the Companys stock options.





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Results of Operations



Year Ended December 31, 2013 compared to December 31, 2012



The year ended December 31, 2013 had a net loss of $8,287,763 compared to a net income of $8,929,357 for the year ended December 31, 2012. The comparative year recorded a net income instead of a net loss due to a net gain of $16,278,410 from the sale of Nicaraguan properties that was partially offset by the loss of $3,823,118 on the disposal of the Tambor property in Guatemala. The current year net loss is significantly impacted by an impairment of available-for-sale investments which resulted in a charge of $5,934,443. As well, the current year includes a charge of $171,815 for the write-off of exploration and evaluation costs regarding the Santa Brigida property whereas there were no exploration and evaluation costs were written off in the comparative year. The comparative year recorded a $41,780 loss on disposal of property and equipment and an impairment charge of $855,632 on shares held in an associated company whereas the current year did not. Both the current and comparative years recorded fairly similar gains from receipt of mineral property option payments. The Companys share of post-tax losses of Rackla for the current year was $493,318 compared to $366,950 for the comparative year. The current year share of Racklas post-tax losses was actually greater than $493,318 but only this amount was recorded to reduce the investment in associate carrying amount to $1.



Exploration expenditures for the current year totalled $1,039,309 compared to $884,966 for the comparative year, an increase of $154,343. The higher exploration expenditures relate mostly to the Santa Brigida property in Mexico.



General and administrative expenses for the current year were $844,056 compared to $1,498,618 for the comparative year, a decrease of $654,562. Significant cost decreases were $385,320 in share-based compensation, $99,826 in consulting fees, $86,364 in legal and audit fees, $61,500 in management fees, and $39,114 in travel and accommodation. The comparative year recorded a share-based compensation expense of $385,320 whereas the current year did not have any share-based compensation expense. Consulting fees were lower because of the termination of a long standing financial consulting agreement early in the current year. Legal and audit fees were higher in the comparative year due to the Nicaraguan and Guatemalan property sale transactions that occurred during that year.  Management fees were higher in the comparative year due to a bonus of $72,000 paid to the Chief Executive Officer during that year. Travel and accommodation costs were lower because of the Company engaging in less corporate activities than that in the comparative year. Significant general and administrative cost increases were $81,324 in property investigations and $32,547 in office and miscellaneous. There was less property investigation costs recorded during the comparative year because these costs were only incurred towards the end of 2012 whereas the Company investigated numerous opportunities throughout the current year. Office and miscellaneous costs were higher in large part to directors and officers insurance that became effective towards the end of the comparative year.





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Year Ended December 31, 2012 compared to December 31, 2011



The year ended December 31, 2012 recorded a net income of $8,929,357 compared to a net loss of $3,350,056 for the year ended December 31, 2011, a positive difference of $12,279,413.  Fiscal 2012 showed a net income instead of a loss due to a net gain of $16,278,410 from the B2Gold Sale.  This gain more than offset a loss of $3,823,118 recorded on the disposal of the Tambor property during 2012.  The net loss before income taxes for the comparative year was significantly reduced by the gain of $4,807,443 resulting from the distribution of assets to Rackla.  Both 2012 and the comparative year recorded impairment charges stemming from the value of shares held in other companies, with 2012 having impairment charges of $855,632 relating to the Companys investment in Rackla and $20,148 relating to the shares held in Focus. The impairment charge in the comparative year was $465,925 and was related to the shares held in Focus as well. There was no deferred income tax recovery or expense recorded for 2012 but the comparative year recorded a deferred income tax recovery of $716,754 relating to flow-through share issuances.



Exploration expenditures for the year ended December 31, 2012 totaled $884,966 compared to $6,390,053 for the comparative year, a decrease of $5,505,087.  The higher exploration expenditures in the comparative year relate mostly to the Companys drilling programs and other exploration activities on its formerly held Yukon properties. During 2012, exploration expenditures were significantly reduced as the Company had been awaiting a drill permit for its properties in Guatemala.   Both 2012 and the comparative year recorded gains of $101,564 and $157,088 respectively from property option payments received with respect to the Tlacolula property in Mexico.



General and administrative expenses for the year ended December 31, 2012 were $1,498,618 compared to $1,242,463 for the year ended December 31, 2011, an increase of $256,155. Both 2012 and the comparative year recorded significant share-based compensation expenses of $385,320 and $306,915 respectively. Notable cost increases in 2012 were $81,000 in management fees, $53,299 in legal and audit fees, $48,516 in salaries and benefits, $34,248 in travel and accommodation, and $32,642 in rent and utilities. Management fees were higher due to a bonus of $72,000 paid to the Chief Executive Officer and an increase in his monthly management fee. Legal and audit fees were higher mostly due to adjustments in the comparative year that saw some legal and audit fees reclassified as transaction costs for the Spin-Out. Salaries and benefits and travel and accommodation costs were both impacted with an increase in property investigation during 2012.  Rent and utilities costs were higher in 2012 because of a new office lease that took effect in the fourth quarter of 2011. A notable cost decrease was $56,361 in public relations which was due to the increased requirements resulting from the Spin-Out in the comparative year.



Mineral Properties



Year Ended December 31, 2013



During the year ended December 31, 2013, the Company incurred the following expenditures on its mineral properties:



Guatemala - $478,760 was incurred on exploration and property investigation, and administrative related costs, of which $69,464 was incurred on the Southeast Guatemala Ag-Au Epithermal Fields property.



Nicaragua - $30,081 was incurred on miscellaneous exploration and administrative related costs.





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Mexico - The Company received option payments on its Tlacolula Property from Fortuna in the form of cash and shares with a combined value of $98,590.  A total of $530,568 was incurred on exploration, property investigation, and miscellaneous administrative costs of which $472,155 was incurred on the Santa Brigida property.  Acquisition costs totalling $171,815 were recorded during the current year with respect to the Santa Brigida property but then written off with the termination of the Santa Brigida option agreement.



Year Ended December 31, 2012



During the year ended December 31, 2012, the Company incurred the following expenditures on its mineral properties:



Guatemala - $794,388 was incurred on exploration and property investigation.



Nicaragua - $17,406 was incurred on miscellaneous exploration and administrative related costs.



Mexico - The Company received option payments on its Tlacolula Property from Fortuna in the form of cash and shares with a combined value of $101,564 and incurred $73,172 on property investigation and miscellaneous administrative costs.



Year Ended December 31, 2011



A summary of the Companys expenditures on its mineral properties, including the properties spun-out to Rackla, during the year ended December 31, 2011 is as follows:



Yukon/Alaska - $4,954,479 was incurred on exploration activities but this amount was offset by a $25,000 government grant received and other recovered costs totalling $13,199 during the year.  Acquisition costs during the year totalled $386,619 of which $266,919 was cash and $119,700 was the value of shares issued.  Acquisition costs were then offset by $75,000, which was a portion of the proceeds received as an option payment from Solomon Resources Limited (Solomon) on the Ten Mile Creek property.



Guatemala - $1,387,041 was incurred on exploration.



Nicaragua - $29,899 was incurred on miscellaneous exploration related costs.



Mexico - $18,634 was incurred on miscellaneous exploration related costs.  The Company also received cash and shares from Fortuna with a combined value of $59,588 as a result of option payments received on its Tlacolula Property.



Per Share Income (Loss)



The Company reported a net loss and loss per share for fiscal years 2013 and 2011 compared to a net income and income per share for fiscal 2012.  The net income and income per share for fiscal 2012 was the result of a net gain of $16.3 million on the sale of Nicaraguan properties to B2Gold during fiscal 2012.  During fiscal 2013, the Company recorded an impairment on available-for-sale investments of $5.9 million which significantly increased the net loss and net loss per share for that year.   Fiscal 2011 also showed a gain on distribution of $4.8 million due to the Spin-Out which significantly reduced the net loss and net loss per share for that period. The Companys weighted average number of shares did not change throughout fiscal 2013 or 2012 due to no share capital activity.





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B.

Liquidity and Capital Resources



Outlook



The Company expects its current capital resources to be sufficient to carry out its planned exploration programs and operating costs for the next twelve months; however, the Company has not yet achieved profitable operations, has accumulated losses of $53,137,013 since inception, and is expected to incur further losses in the development of its business.  However, the Company has sufficient cash resources and a working capital surplus of $10.4 million to meet its obligations for at least the next twelve months from the end of the reporting year. Actual funding requirements may vary from those planned due to a number of factors, including the progress of exploration and development activity.  Management believes it will be able to raise equity capital as required in the long term, but recognizes the uncertainty attached thereto.  The Company continues to use various strategies to minimize its dependence on equity capital, including the securing of joint venture partners where appropriate.



Year ended December 31, 2013 compared to December 31, 2012



The Companys cash increased from approximately $0.99 million at December 31, 2012 to $1.56 million at December 31, 2013; however, working capital has significantly decreased. As at December 31, 2013 working capital was $10.4 million compared to $17.7 million at December 31, 2012.  The decrease in working capital was due in part to the Company using capital for its 2013 operations but primarily because the Companys investment in B2Gold common shares had decreased in value which resulted in an impairment of $5.9 million being charged to operations for the year ended December 31, 2013. As at December 31, 2013, these shares had a fair value of $8.47 million.  The Company is entitled to sell a maximum of 10% of the original number of B2Gold shares within any 30-day period without encumbrance.  If the Company wishes to exceed this limitation, there may be a delay of up to 15 days before the selling of the shares can be completed. During the year ended December 31, 2013, the Company sold 677,500 B2Gold shares for proceeds of $2.42 million.  Subsequent to December 31, 2013, the Company sold an additional 1,057,000 B2Gold shares for proceeds of approximately $3.35 million.



The Company also currently holds a portfolio of available-for-sale investments consisting of 1,007,406 common shares of Focus Ventures Ltd. (Focus). As at December 31, 2013, the carrying amount for all available-for-sale investments was $8.69 million compared to $16.55 million as at December 31, 2012.  As at December 31, 2013, the Company also held 9,866,376 common shares in Rackla with a fair value of $147,996 but these are recorded as an investment in Rackla which is being accounted for under the equity method for investments with significant influence instead of as available-for-sale investments. The Company also holds 1,345,338 warrants of Rackla by way of a private placement during 2012 and although these warrants are transferable, they are not traded on the TSX-V as were the other 7,175,700 Rackla warrants held.  The 7,175,700 tradable Rackla warrants expired in June 2013. During the current year, the Company sold its holding of 34,589 common shares of Fortuna for proceeds of $153,998.





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Year ended December 31, 2012 compared to December 31, 2011



The Companys cash decreased from approximately $1.76 million at December 31, 2011 to $0.99 million at December 31, 2012; however, working capital significantly increased. As at December 31, 2012 working capital was $17.69 million compared to $3.65 million at December 31, 2011.  The increase was due to the receipt of 4,815,894 B2Gold common shares as consideration for the B2Gold Sale. As at December 31, 2012, these shares had a fair value of $16.2 million. During the year ended December 31, 2012, the Company sold 255,000 B2Gold shares for proceeds of $928,365.



At December 31, 2012, the Company also held a portfolio of available-for-sale investments consisting of 1,007,406 common shares of Focus Ventures Ltd. (Focus), 34,589 common shares of Fortuna, of which 11,415 were received subsequent to December 31, 2012, and 7,175,700 warrants in Rackla, all public companies with common directors or officers. As at December 31, 2012, the carrying amount for all available-for-sale investments was $16.55 million compared to $0.64 million as at December 31, 2011.  As at December 31, 2012, the Company also held 9,866,376 common shares in Rackla with a fair value of $0.49 million. The Company also held 1,345,338 warrants of Rackla by way of a private placement during 2012 and although these warrants were transferable, they were not traded on the TSX-V.



C.

Research and Development, Patents and Licenses, etc.



Not applicable.



D.

Trend Information



The Company is an exploration stage natural resource company engaged in the process of exploring and evaluating its mineral properties and projects and has not yet determined whether its properties and projects contain ore reserves that are economically recoverable.  Consequently, there is no production, sales, or inventory in the conventional sense.  The Companys financial success will be dependent upon the extent to which it can discover mineralization and the economic viability of developing such properties.  Such development may take years to complete and the amount of resulting income, if any, is difficult to determine with any certainty.  The sales value of any mineralization discovered by the Company is largely dependent upon factors beyond the Companys control such as the market value of the commodities produced.



The Company is not aware of any trends, uncertainties, demands, commitments or events which are reasonably likely to have a material effect upon the Companys net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.



E.

Off-balance Sheet Arrangements



The Company has no Off-Balance Sheet Arrangements.





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F.

Tabular Disclosure of Contractual Obligations



The following table lists as of December 31, 2013 information with respect to the Companys known contractual obligations.



|                                                                                |                        |                  |           |           |                  
|------------------------------------------------------------------------------- | ---------------------- | ---------------- | --------- | --------- | -----------------
|                                                                                | Payments due by period
|Contractual Obligations                                                         | Total                  | less than 1 year | 1-3 years | 3-5 years | more than 5 years
|Long-Term Debt Obligations                                                      | 0                      | 0                | 0         | 0         | 0                
|Capital (Finance) Lease Obligations                                             | 0                      | 0                | 0         | 0         | 0                
|Operating Lease Obligations(1)                                                  | $1,397,018             | $298,506         | $526,688  | $381,216  | 190,608          
|Purchase Obligations                                                            | 0                      | 0                | 0         | 0         | 0                
|Other Long-Term Liabilities Reflected on the Company's Balance Sheet under IFRS | 0                      | 0                | 0         | 0         | 0                
|Total                                                                           | $1,397,018             | $298,506         | $526,688  | $381,216  | 190,608          

(1)

Amount indicated is for office rent leases for the Companys corporate operations in Vancouver, BC.



G.

Safe harbour



See Note Regarding Forward-Looking Statements.



Item 6.

Directors, Senior Management and Employees



A.

Directors and Senior Management



The following table lists as of April 11, 2014 the names of the directors and senior management of  the Company.  The directors and senior management have served in their respective capacities since their election and/or appointment and will serve until the next Annual General Meeting of Shareholders or until a successor is duly elected, unless the office is vacated in accordance with the Companys Articles.





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|                                           |                                                  |                          
|------------------------------------------ | ------------------------------------------------ | -------------------------
|Name and Municipality of Residence         | Position(s) held                                 | Date of First Appointment
|                                           |                                                  |                          
|Simon Ridgway
Pemberton, BC, Canada        | Director, President & Chief Executive Officer    | September 30, 1997       
|                                           |                                                  |                          
|Ralph Rushton
Vancouver, BC, Canada        | Director & Vice-President, Corporate Development | May 2, 2003              
|                                           |                                                  |                          
|Mario Szotlender,
Caracas, Venezuela       | Director                                         | December 13, 1999        
|                                           |                                                  |                          
|Bradford Cooke
North Vancouver, BC, Canada | Director                                         | July 1, 2004             
|                                           |                                                  |                          
|William Katzin
North Vancouver, BC, Canada | Director                                         | July 27, 2011            
|                                           |                                                  |                          
|Kevin Bales
Delta, BC, Canada              | Chief Financial Officer                          | July 23, 2009            
|                                           |                                                  |                          
|Sally Whittall
Maple Ridge, BC, Canada     | Corporate Secretary                              | December 2, 2011         
|                                           |                                                  |                          



Biographical Information



The following is a brief description of the employment background of the Companys directors and senior management:



Simon T.P. Ridgway, Age 65  Director, President & Chief Executive Officer



Mr. Simon Ridgway is a successful prospector and mining financier, gaining his initial experience with grass roots mineral exploration. Starting out as a prospector in the Yukon Territory in the 1970's, Mr. Ridgway and the teams under his guidance have discovered gold deposits in Honduras, Guatemala and Nicaragua and silver deposits in Mexico. Simon is a founder and the Chairman of Fortuna Silver Mines Inc., and Founder and Director and/or CEO of Cordoba Minerals Corp., Medgold Resources Corp., Focus Ventures Ltd., and Rackla Metals Inc., all publicly-traded resource companies.



Ralph Rushton, Age 51  Director



Mr. Ralph Rushton earned a BSc. in Geology from Portsmouth in the UK, an MSc from the University of Alberta, and studied Business Communications at Simon Fraser University in Vancouver.  He has over 20 years experience in gold mining and exploration gained mainly with the Anglo American group in Southern Africa, the Middle East and Eastern Europe.  Mr. Rushton is a director of Focus Ventures Ltd., Medgold Resources Corp. and Rackla Metals Inc., all publicly-traded resource companies, and is currently responsible for corporate development of Focus Ventures and Medgold Resources.





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Mario Szotlender, Age 53 - Director



Mr. Szotlender holds a degree in international relations and is fluent in several languages.  He has successfully directed Latin American affairs for numerous private and public companies over the past 25 years, specializing in developing new business opportunities and establishing relations within the investment community.  He has been involved in various mineral exploration and development joint ventures (precious metals and diamonds) in Central and South America, including heading several mineral operations in Venezuela, such as Las Cristinas in the 1980s.



Mr. Szotlender is also a Director of Atico Mining Corporation, Endeavour Silver Corp., Focus Ventures Ltd., Fortuna Silver Mines Inc., Iron Creek Capital Corp. and Magellan Minerals Ltd., all publicly-traded resource companies.  He also consults to other public companies, and to several private exploration companies.



Bradford Cooke, Age 59 - Director



Bradford Cooke, P. Geo., is a professional geologist with 35 years experience in the mining industry, specializing in the financing, acquisition, exploration and development in mineral deposits.  Mr. Cooke received his B.Sc. Geology (Honors) degree in 1976 and a M.Sc. Geology degree in 1984.  He has participated in the discovery of several mineral deposits, including uranium in Labrador, gold and tungsten in B.C., gold in Suriname and silver in Mexico, and has raised over CAD$350 million in equity and joint venture financings for resource projects since 1988.  From 1976 to 1987, he worked as a project geologist for Noranda Mines, Shell Minerals, Chevron Minerals and as a geological consultant to junior mining companies.  Mr. Cooke founded Canarc Resource Corp. in 1988 and Endeavour Silver Corp. in 2003, both publicly-traded resource companies.



William Katzin, Age 59 - Director



Mr. Katzin is a graduate of the University of Cape Town, South Africa with a Bachelor of Commerce and Law degree.  He is a member of the Institute of Chartered Accountants of British Columbia.  He has been a partner in private practice with a Vancouver firm of Chartered Accountants since 1986 and has experience working with resource and exploration companies.  Mr. Katzin is also a director of Cordoba Minerals Corp. and Rackla Metals Inc., both publicly-traded resource companies.



Kevin Bales, Age 47  Chief Financial Officer



Mr. Bales has 20 years of financial reporting experience in mining and information technology industries, and holds a Bachelor of Management degree with a major in accounting from the University of Lethbridge.  He is also Chief Financial Officer of Cordoba Minerals Corp., Focus Ventures Ltd., Medgold Resources Corp., Rackla Metals Inc. and Western Pacific Resources Corp., all publicly-traded resource companies with operations in North America, Western Europe, Central America and South America.





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Sally Whittall, Age 54  Corporate Secretary



Ms. Whittall was a corporate securities legal assistant in a major Vancouver law firm for six years prior to joining a group of mineral exploration companies in 1994.  She has completed the Canadian Securities Course.  Ms. Whittall is also the Corporate Secretary of and handles the corporate regulatory work for Cordoba Minerals Corp., Focus Ventures Ltd., Fortuna Silver Mines Inc., Medgold Resources Corp., Rackla Metals Inc. and Western Pacific Resources Corp., all publicly-traded resource companies.



There are no family relationships among the members of the board of directors or the members of senior management of the Company.  There are no arrangements or understanding with major shareholders, customers, suppliers or others, pursuant to which any member of the board of directors or member of senior management was selected.



B.

Compensation



Directors and senior management are compensated in a manner consistent with their respective contributions to the overall benefit of the Company.  During the fiscal year ended December 31, 2013, the Company paid to its Directors and senior management the following amounts:



|                      |                                              |        
|--------------------- | -------------------------------------------- | -------
|Name                  | Position                                     | Amount 
|Simon Ridgway (1) (2) | President & Chief Executive Officer          | $79,500
|Kevin Bales           | Chief Financial Officer                      | $24,696
|Ralph Rushton (2) (3) | former Vice-President, Corporate Development | $95,047
|Sally Whittall        | Corporate Secretary                          | $15,969



(1)

Paid to Mill Street Services Ltd., a private company owned by the Ridgway Family Trust, of which Simon Ridgway is the Trustee.



(2)

Simon Ridgways position changed from Chairman to President on December 13, 2012 and Ralph Rushtons position changed from President to Vice-President, Corporate Development on December 13, 2012.



(3)

Ralph Rushton resigned as Vice-President, Corporate Development on January 1, 2014.



No stock options were granted to or forfeited by directors and officers of the Company during the fiscal year ended December 31, 2013.



The Company has no standard arrangement pursuant to which directors are compensated for their services in their capacity as such except for the granting from time to time of incentive stock options.  The following table sets out all options in the Company which are held as of April 11, 2014 by the current directors and officers:





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|                 |                               |                    |                                                     
|---------------- | ----------------------------- | ------------------ | ----------------------------------------------------
|Optionees        | Number of Shares
Subject      | Exercise Price
($) | Expiration Date                                     
|                 |                               |                    |                                                     
|Simon Ridgway    | 200,000
220,000300,000720,000 | $0.29
$0.69
$0.20  | January 7, 2020
September 23, 2020
December 12, 2022
|                 |                               |                    |                                                     
|Mario Szotlender | 125,000
100,000175,000400,000 | $0.29
$0.69
$0.20  | January 7, 2020
September 23, 2020
December 12, 2022
|                 |                               |                    |                                                     
|Ralph Rushton    | 200,000
100,000100,000400,000 | $0.29
$0.69
$0.20  | January 7, 2020
September 23, 2020
December 12, 2022
|                 |                               |                    |                                                     
|Bradford Cooke   | 125,000
100,000100,000325,000 | $0.29
$0.69
$0.20  | January 7, 2020
September 23, 2020
December 12, 2022
|                 |                               |                    |                                                     
|William Katzin   | 150,000200,000350,000         | $0.81
$0.20        | July 26, 2021
December 12, 2022                     
|                 |                               |                    |                                                     
|Kevin Bales      | 110,000
100,000140,000350,000 | $0.29
$0.69
$0.20  | January 7, 2020
September 23, 2020
December 12, 2022
|                 |                               |                    |                                                     
|Sally Whittall   | 70,000
100,000150,000320,000  | $0.29
$0.69
$0.20  | January 7, 2020
September 23, 2020
December 12, 2022
|                 |                               |                    |                                                     
|TOTAL:           | 2,865,000                     |                    |                                                     



C.

Board Practices.



The directors of the Company are elected annually and hold office until the next Annual General Meeting of the members of the Company or until their successors in office are duly elected or appointed.  All directors are elected for a one-year term.  All officers serve at the pleasure of the board of directors.  The next annual general meeting will be held no later than December 31, 2014.



Currently, there are no directors service contracts with the Company or any of its subsidiaries providing for benefits upon termination of employment.





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Audit Committee



The Audit Committee of the Company is comprised of William Katzin, Mario Szotlender and Bradford Cooke, all of whom are independent and financially literate.  The Audit Committee Charter provides that the primary function of the Audit Committee is to assist the Board of Directors of the Company (the Board) in fulfilling its oversight responsibilities by reviewing the financial information to be provided to the shareholders and others, the systems of internal controls and management information systems established by management and the Companys external audit process and monitoring compliance with the Companys legal and regulatory requirements with respect to its financial statements.



The Audit Committee is accountable to the Board.  In the course of fulfilling its specific responsibilities hereunder, the Audit Committee is expected to maintain an open communication between the Companys external auditors and the Board.  The responsibilities of a member of the Audit Committee are in addition to such members duties as a member of the Board.



The Audit Committee does not plan or perform audits or warrant the accuracy or completeness of the Companys financial statements or financial disclosure or compliance with generally accepted accounting procedures as these are the responsibility of management and the external auditors.



Compensation Committee



The Compensation Committee of the Company is comprised of William Katzin, Mario Szotlender and Bradford Cooke, all of whom are independent of management.  The Compensation Committee Charter provides that the function of the Compensation Committee is to assist the Board in discharging its oversight responsibilities relating to compensation, including the compensation of key senior management employees of the Company.



The Compensation Committee is to review and make recommendations to the Board on an annual basis with respect to the Companys stock option plan and make recommendations respecting grants of options.  It shall also review and recommend to the Board annually, or more frequently as required, managements succession plans for the Executive Management, including the specific development plans and career planning for potential successors to occupy these positions.



Disclosure Committee



The Disclosure Committee of the Company is comprised of Simon Ridgway and Ralph Rushton, and was formed in order to ensure that communications with the investing public about the Company are timely, factual, accurate, and broadly disseminated in accordance with all applicable legal and regulatory requirements.



The Disclosure Committee Charter extends to all employees of the Company, its Board of Directors, those authorized to speak on its behalf and all other insiders.  It covers disclosures in documents filed with the securities regulators, financial and non-financial disclosure, including managements discussion and analysis and written statements made in the Companys annual and quarterly reports, new releases, letter to shareholders, presentations by senior management and information contained on the Companys website and other electronic communications with analysts and investors, interviews with the media as well as speeches, press conferences and conference calls.





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D.

Employees.



As at December 31, 2013, the Company had three employees in Guatemala and Nicaragua.  One employee provides administrative services and two employees provide geological services.  None of the employees is represented by a union.  Personnel for the Companys Vancouver operations are provided by a related party through a shared services agreement.



E.

Share Ownership.



The following table sets forth, as of April 11, 2014, the number of the Companys Common Shares beneficially owned or controlled by (a) the directors and members of senior management of the Company, individually, and as a group, and (b) the percentage ownership of the outstanding Common Shares represented by such shares.  The security holders listed below are deemed to be the beneficial owners of Common Shares underlying options which are exercisable within 60 days from the above date.  Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown.



|                |                                                                |                      |                        
|--------------- | -------------------------------------------------------------- | -------------------- | -----------------------
|Title 
of Class | Name and Address of
Beneficial Owner                           | Amount
and Nature(1) | Percentage 
of Class(1)
|Common          | Simon Ridgway
Pemberton, BC                                    | 5,775,952(2)         | 6.61%                  
|Common          | Ralph Rushton
Vancouver, BC                                    | 520,001(3)           | 0.60%                  
|Common          | Mario Szotlender
Caracas, Venezuela                            | 1,918,781(4)         | 2.20%                  
|Common          | Bradford Cooke
North Vancouver, BC                             | 525,000(5)           | 0.60%                  
|Common          | William Katzin
West Vancouver, BC                              | 350,000(6)           | 0.40%                  
|Common          | Kevin Bales
Delta, BC                                          | 350,000(7)           | 0.4040%                
|Common          | Sally Whittall
Maple Ridge, BC                                 | 325,757(8)           | 0.37%                  
|Common          | All Directors and Senior Management as a group (7 individuals) | 9,765,491            | 11.18%                 



(1)

Based on 86,675,617 shares outstanding as at April 11, 2014, plus any Common Shares deemed to be beneficially owned by the individual (or, for the last row of the table, by the group) pursuant to options and warrants which are exercisable by the individual (or, for the last row of the table, by the group) within 60 days from the above date.



(2)

720,000 of these shares represent currently exercisable stock options.  3,069,640 of the free trading shares are held by Mill Street Services Ltd., a private company owned by the Ridgway Family Trust, of which Simon Ridgway is the Trustee.  1,389 of the free trading shares are held by Elvietri Holdings AVV, a private company owned by Simon Ridgway.





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(3)

400,000 of these shares represent currently exercisable stock options.



(4)

400,000 of these shares represent currently exercisable stock options.



(5)

325,000 of these shares represent currently exercisable warrants and stock options.



(6)

All of these shares represent currently exercisable stock options.



(7)

All of these shares represent currently exercisable stock options.



(8)

320,000 of these shares represent currently exercisable stock options.



Stock Option Plan



In January 2010, the Company established a Director and Employee Stock Option Plan, the material terms of which are as follows:



1.

the Plan reserves a rolling maximum of 10% of the issued capital of the Company at the time of granting of each option, with no vesting provisions;

2.

no more than 5% of the issued capital may be reserved for issuance to any one individual in any 12 month period;

3.

no more than 2% of the issued capital may be reserved for issuance to any Consultant (as defined by the TSX Venture Exchange (TSXV) or to an optionee providing investor relations services in any 12 month period;

4.

the minimum exercise price of an option cannot be less than the Market Price (as defined by the TSXV) of the Companys shares;

5.

options will be granted for a period of up to 10 years;

6.

options are non-assignable and non-transferable; and

7.

there are provisions for adjustment in the number of shares issuable on exercise of options in the event of a share consolidation, split, reclassification or other relevant change in the Companys corporate structure or capitalization.



As at April 11, 2014, there were 4,915,000 shares reserved for issuance and subject to outstanding options granted under the Plan.





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Item 7.

Major Shareholders and Related Party Transactions.



A.

Major Shareholders.



A major shareholder of the Company is a person that beneficially owns, directly or indirectly, more than 5% of the Companys issued and outstanding Common Shares including any Common Shares deemed to be beneficially owned by the shareholder pursuant to options and warrants which are exercisable by the shareholder within 60 days.  To the best of the Companys knowledge, as of April 11, 2014 the only major shareholders in the Company are:



| |                   |               |           
| | ----------------- | ------------- | ----------
| | Name              | No. of Shares | Percentage
| | Goodman & Company | 10,952,718    | 12.63%    
| | Sprott Inc.       | 5,939,400     | 6.85%     
| | Simon Ridgway     | 5,055,952     | 5.83%     



To the best of the Companys knowledge, there are no arrangements the operation of which may result in a change in control of the Company.



The Company is a publicly-owned corporation, the shares of which are owned by residents of Canada, the United States, and other countries.  The Company is not controlled directly or indirectly by another corporation or any foreign government.  As of April 11, 2014, there were 86,675,617 shares of the Company outstanding, of which approximately 1,901 U.S. holders of record or beneficial holders held a total of 15,380,130 shares (17.7%).  The number of beneficial holders was determined based on a report prepared by Broadridge Investor Communications, a U.S. mailing service.



B.

Related Party Transactions.



Other than as disclosed in Item 6.B  Directors, Senior Management and Employees - Compensation, in the Related Party Transactions section in the MD&A for the year ended December 31, 2013, and disclosed below, there have been no related party transactions or proposed transactions involving any insider, or associate or affiliate of an insider, that have occurred during our three most recently completed fiscal years which have materially affected or will materially affect the Company.



During the year ended December 31, 2013, the Company entered into the following transactions with related parties:



l

Reimbursed Gold Group, company controlled by the Chief Executive Officer of the Company, $351,411 (2012: $63,532) for shared administrative costs and other business related expenses paid by Gold Group on behalf of the Company. As of December 31, 2013, $31,369 was payable to Gold Group. The agreement with Gold Group became effective July 1, 2012 and the Company provided Gold Group with a deposit of $60,000.



l

Paid or accrued $79,500 (2012: $141,000; 2011: $60,000) in management fees to Mill Street Services Ltd. for Simon Ridgways services as Chief Executive Officer of the Company.  Mill Street Services Ltd. is a private company owned by the Ridgway Family Trust, of which Simon Ridgway is the Trustee.  From January 2010 through March 2012 the monthly fee was $5,000.  From April 1, 2012 to September 30, 2013, the fee was $6,000 per month. From October 1, 2013, the fee was increased to $8,500 per month. The fees paid during the year ended December 31, 2012 includes a $72,000 bonus paid to Mill Street Services Ltd. in recognition of the services of Simon Ridgway in completing the Companys sale of its Nicaragua properties to B2Gold.





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l

Paid or accrued $42,354 (2012: $76,979; 2011: $62,650) in salary to Pedro Garcia, the General Manager  Latin America of the Company.



l

Paid or accrued $Nil (2012: $Nil; 2011: $21,175) in salary to Tim Osler for his services as Corporate Secretary up to November 2011.



l

Paid or accrued $Nil (2012: $ Nil; 2011: $10,000) in geological consulting fees to Condor Pacific Consulting Inc., a company controlled by David Cass who is a former Vice President of Exploration of the Company.



Management believes the transactions referenced above were on terms at least as favourable to the Company as the Company could have obtained from unaffiliated parties.



Relationship with Rackla Metals Inc. (Rackla)



Rackla was incorporated pursuant to a plan of arrangement (the Arrangement) with the Company completed on December 8, 2011. As part of the Arrangement, the Companys interest in its Yukon properties were transferred to Rackla, together with $1.0 million in cash, and available-for-sale investments consisting of 750,000 common shares of Solomon Resources Limited and 600,000 common shares of Cordoba Minerals Corp., formerly called Wesgold Minerals Inc.



The Arrangement resulted in the Company retaining 7,175,701 common shares and 7,175,700 share purchase warrants of Rackla, representing 19.9% of Racklas outstanding common shares and share purchase warrants in exchange for the assets distributed to Rackla. Rackla meets the definition of an associate and has been equity accounted for in the Companys consolidated financial statements.



During the year ended December 31, 2012, the Company participated in a private placement of Rackla whereby 2,690,675 units at $0.08 per unit were acquired by the Company for a total cost of $215,254. Each unit consisted of one common share and one-half warrant. Each whole warrant entitles the Company to purchase one additional common share of Rackla at $0.10, expiring October 10, 2014. With the acquisition of the 2,690,675 common shares, the Company has a 19.5% interest in Rackla as of December 31, 2013.



The Company and Rackla have common Directors in Simon Ridgway, Ralph Rushton, and William Katzin.



For additional detail regarding the Arrangement, refer to note 8 of the Companys audited consolidated financial statements for the year ended December 31, 2013.



Relationship with Fortuna Silver Mines Inc. (Fortuna)



The Company owns a 100% interest in the Tlacolula Property in Mexico. By an agreement signed in September 2009 and amended in December 2012, the Company granted to Fortuna the option to earn a 60% interest in the Tlacolula Property by spending US$2 million on exploration of the Property and making staged payments totaling US$250,000 cash and US$250,000 in common stock no later than January 31, 2015.





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The Company and Fortuna have common directors in Simon Ridgway and Mario Szotlender.



For additional detail regarding this agreement, refer to note 9 of the Companys audited consolidated financial statements for the year ended December 31, 2013.



C.

Interests of Experts and Counsel.



Not Applicable.



Item 8.

Financial Information.



A.

Consolidated Statements and Other Financial Information.



The financial statements as required under Item 18 are attached hereto and found immediately following Item 19 of this Annual Report.  The Companys auditor is BDO Canada LLP, Chartered Accountants.  An auditors report of BDO Canada LLP with respect to the fiscal years ended December 31, 2013, 2012 and 2011 and the statements of financial position as at December 31, 2013 and 2012, are included herein immediately preceding the consolidated financial statements.



There are no legal proceedings currently pending which may have, or have had in the recent past, significant effects on the Companys financial position or profitability.



The Company has no history of paying dividends and the Company does not contemplate that any dividends will be paid on its shares in the immediate or the foreseeable future.  The present policy of the Company is to retain future earnings for use in its operations and the expansion of its business.



B.

Significant Changes.



There have been no significant changes in the Company since the date of the Companys annual financial statements.



Item 9.

The Offer and Listing.



The Company shares were listed and posted for trading on the TSXV (formerly the Canadian Venture Exchange and before that, the Vancouver Stock Exchange) on October 7, 1998 and currently trades on the TSXV.  The TSXV trading symbol is RDU.



Effective October 4, 2002, the Company began trading on the Regulated Unofficial Market of the Frankfurt Stock Exchange under the trading symbol RE1.  The Company has the German Security ID number of 725224.



Effective December 22, 2004, the Companys shares began trading on the U.S. Over-the-Counter Bulletin Board (OTCBB) under the trading symbol RDUFF.





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A.

Offer and Listing Details.



The following tables set forth the reported high and low closing bid prices on the TSXVand the OTCBBfor (a) the Companys five most recent fiscal years; (b) each quarterly period for the Companys past two fiscal years and for the first quarter of the Companys 2014 fiscal year, and (c) for each of the six months from October 2013 to March 2014.



|                                                         |             |             |       |      
|-------------------------------------------------------- | ----------- | ----------- | ----- | -----
|High and Low Price for the Five Most Recent Fiscal Years
|Fiscal Year ended December 31                            | TSXV (CAD$) | OTCBB (US$)
|High                                                     | Low         | High        | Low  
|2013                                                     | $0.23       | $0.06       | $0.23 | $0.06
|2012                                                     | $0.39       | $0.15       | $0.39 | $0.15
|2011                                                     | $0.93       | $0.20       | $0.97 | $0.17
|2010                                                     | $0.97       | $0.20       | $0.33 | $0.06
|2009                                                     | $0.28       | $0.09       | $0.57 | $0.02



|                                                                                                                     |             |             |       |      
|-------------------------------------------------------------------------------------------------------------------- | ----------- | ----------- | ----- | -----
|High and Low Prices for Each Quarterly Period for the Past Two Fiscal Years and For the First Quarter of Fiscal 2014
|Period Ended                                                                                                         | TSXV (CAD$) | OTCBB (US$)
|High                                                                                                                 | Low         | High        | Low  
|March 31, 2014                                                                                                       | $0.15       | $0.10       | $0.14 | $0.10
|December 31, 2013                                                                                                    | $0.14       | $0.08       | $0.13 | $0.07
|September 30, 2013                                                                                                   | $0.15       | $0.08       | $0.13 | $0.07
|June 30, 2013                                                                                                        | $0.16       | $0.06       | $0.15 | $0.06
|March 31, 2013                                                                                                       | $0.23       | $0.15       | $0.23 | $0.14
|December 31, 2012                                                                                                    | $0.30       | $0.17       | $0.27 | $0.17
|September 30, 2012                                                                                                   | $0.30       | $0.17       | $0.31 | $0.17
|June 30, 2012                                                                                                        | $0.38       | $0.15       | $0.35 | $0.15
|March 31, 2012                                                                                                       | $0.39       | $0.24       | $0.39 | $0.22



|                                                   |             |             |       |      
|-------------------------------------------------- | ----------- | ----------- | ----- | -----
|High and Low Prices for the Most Recent Six Months
|                                                   | TSXV (CAD$) | OTCBB (US$)
|Period                                             | High        | Low         | High  | Low  
|March 2014                                         | $0.15       | $0.12       | $0.14 | $0.10
|February 2014                                      | $0.15       | $0.12       | $0.14 | $0.09
|January 2014                                       | $0.12       | $0.10       | $0.11 | $0.08
|December 2013                                      | $0.11       | $0.08       | $0.10 | $0.08
|November 2013                                      | $0.13       | $0.09       | $0.11 | $0.09
|October 2013                                       | $0.14       | $0.10       | $0.13 | $0.10



On April 11, 2014, the closing price of the Common Shares was $0.13 per Common Share on TSXV and US$0.12 per Common Share on the OTCBB.  During the last three years, the Common Shares have not been subject to any trading suspensions.



B.

Plan of Distribution.



Not Applicable





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C.

Markets.



The Companys shares were listed and posted for trading on the TSXV (formerly the Canadian Venture Exchange and before that, the Vancouver Stock Exchange) on October 7, 1998 and currently trades on the TSXV.  The TSXV trading symbol is RDU.



Effective October 4, 2002, the Companys shares began trading on the Regulated Unofficial Market of the Frankfurt Stock Exchange under the trading symbol RE1.  The Company has the German Security ID number of 725224.



Effective December 22, 2004, the Companys shares began trading on the U.S. Over-the-Counter Bulletin Board under the trading symbol RDUFF.



D.

Selling Shareholders.



Not Applicable.



E.

Dilution.



Not Applicable



F.

Expenses of the Issue.



Not Applicable



10.

Additional Information.



A.

Share Capital.



Not Applicable



B.

Articles of Association.



The Companys Articles do not contain any restrictions on the type of business in which the Company may engage.



Section 17 of the Companys Articles provides that, A director or senior officer who holds a disclosable interest (as that term is used in the Business Corporations Act) in a contract or transaction into which the Company has entered or proposes to enter is liable to account to the Company for any profit that accrues to the director or senior officer under or as a result of the contract or transaction only if and to the extent provided in the Business Corporations Act.  A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter and who is present at the meeting of directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any or all of the resolutions considered at the meeting.





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Section 13.5 of the Articles provides that the directors may from time to time determine the remuneration of directors.  However, a disclosable interest does not include compensation to be paid to a director, and therefore such interest is not required to be disclosed pursuant to Section 17 of the Articles.  Management believes that, in the absence of an independent quorum, a director cannot vote compensation to himself or herself.



The borrowing powers of the directors are addressed in Part 8, which states that, The Company, if authorized by the directors, may:



(1)

borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;



(2)

issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;



(3)

guarantee the repayment of money by any other person or the performance of any obligation of any other person; and



(4)

mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.



There is no provision in the Companys Articles regarding a mandatory age for retirement of directors.  There is no requirement for a director to hold shares of the Company.



All of the authorized shares of common stock of the Company are of the same class and, once issued, rank equally as to dividends, voting powers, and participation in assets.  Holders of common stock are entitled to one vote for each share held of record on all matters to be acted upon by the shareholders.  Holders of common stock are entitled to receive such dividends as may be declared from time to time by the Board of Directors, in its discretion, out of funds legally available therefor.



Upon liquidation, dissolution or winding up of the Company, holders of common stock are entitled to receive pro rata the assets of Company, if any, remaining after payments of all debts and liabilities.  No shares have been issued subject to call or assessment.  There are no pre-emptive or conversion rights and no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds.



Any modification, amendment or variation of such shareholder rights or provisions are governed by the British Columbia Business Corporations Act and must be approved by a vote of at least 2/3 of the votes cast at a shareholders meeting.  Unless the British Columbia Business Corporations Act or the Companys Articles otherwise provide, any action to be taken by a resolution of the members may be taken by an ordinary resolution or by a vote of a majority of the shares represented at the shareholders meeting.



The conditions governing the manner in which annual general meetings and extraordinary general meetings of shareholders are convoked, including the conditions of admission are described in the Articles of the Company in Section 10  Meetings of Shareholders.



Section 10.1 states that, Unless an annual general meeting is deferred or waived in accordance with the Business Corporations Act, the Company must hold its first annual general meeting within 18 months after the date on which it was incorporated or otherwise recognized, and after that must hold an annual general meeting at least once in each calendar year and not more than 15 months after the last annual reference date at such time and place as may be determined by the directors.





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Section 10.4 states that, The Company must send notice of the date, time and location of any meeting of shareholders, in the manner provided in these Articles, or in such other manner, if any, as may be prescribed by ordinary resolution (whether previous notice of the resolution has been given or not), to each shareholder entitled to attend the meeting, to each director and to the auditor of the Company, unless these Articles otherwise provide, at least the following number of days before the meeting:



(1)

if and for so long as the Company is a public company, 21 days;



(2)

otherwise, 10 days.



The conditions of admission are described in Section 11.5 where it is stated that, The directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company and any other persons invited by the directors are entitled to attend any meeting of shareholders, but if any of those persons does attend a meeting of shareholders, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.



There are no limitations on the rights to own securities.



There is no provision of the Companys Articles, charter or bylaws that would have an effect of delaying, deferring or preventing a change in control of the Company and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company (or any of its subsidiaries).



There are no conditions imposed by the Articles governing changes in the capital, where such conditions are more stringent that is required by law.



C.

Material Contracts.



Other than as disclosed elsewhere in this Annual Report, the Company has not entered into any material contracts, other than contracts entered into in the ordinary course of business, during the two year period immediately preceding the filing of this Annual Report.



D.

Exchange Controls.



The Company is not aware of any Canadian federal or provincial laws, decrees, or regulations that restrict the export or import of capital, including foreign exchange controls, or that affect the remittance of dividends, interest or other payments to non-Canadian holders of the common shares.  There are no limitations on the right of non-Canadian owners to hold or vote the common shares imposed by Canadian federal or provincial law or by the charter or other constituent documents of the Company.





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E.

Taxation



The following summary of the material Canadian federal income tax consequences are stated in general terms and are not intended to be advice to any particular shareholder.  Each prospective investor is urged to consult his or her own tax advisor regarding the tax consequences of his or her purchase, ownership and disposition of Common Shares.  The tax consequences to any particular holder of Common Shares will vary according to the status of that holder as an individual, trust, corporation or member of a partnership, the jurisdiction in which that holder is subject to taxation, the place where that holder is resident and, generally, according to that holders particular circumstances.  This summary is applicable only to holders who are resident in the United States, have never been resident in Canada, deal at arms length with the Company, hold their Common Shares as capital property and who will not use or hold the Common Shares in carrying on business in Canada.  Special rules, which are not discussed in this summary, may apply to a United States holder that is an issuer that carries on business in Canada and elsewhere.



This summary is based upon the provisions of the Income Tax Act of Canada and the regulations thereunder (collectively, the Tax Act or ITA) and the Canada-United States Tax Convention (the Tax Convention) as at the date of this Annual Report and the current administrative practices of Canada Customs and Revenue Agency.  This summary does not take into account provincial income tax consequences.



Management urges each holder to consult his own tax advisor with respect to the income tax consequences applicable to him in his own particular circumstances.



Canadian Income Tax Consequences



The summary below is restricted to the case of a holder (a Holder) of one or more Common Shares who for the purposes of the Tax Act is a non-resident of Canada, holds his Common Shares as capital property and deals at arms length with the Company.



Dividends



A Holder will be subject to Canadian withholding tax (Part XIII Tax) equal to 25%, or such lower rates as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on his Common Shares. Under the Tax Convention, the rate of Part XIII Tax applicable to a dividend on Common Shares paid to a Holder who is a resident of the United States is, if the Holder is a company that beneficially owns at least 10% of the voting stock of the Company, 5% and, in any other case, 15% of the gross amount of the dividend. The Company will be required to withhold the applicable amount of Part XIII Tax from each dividend so paid and remit the withheld amount directly to the Receiver General for Canada for the account of the Holder.



Disposition of Common Shares



A Holder who disposes of Common Shares, including by deemed disposition on death, will not be subject to Canadian tax on any capital gain thereby realized unless the common Share constituted taxable Canadian property as defined by the Tax Act. Generally, a common share of a public corporation will not constitute taxable Canadian property of a Holder unless he held the common share as capital property used by him carrying on a business in Canada, or he or persons with whom he did not deal at arms length alone or together held or held options to acquire, at any time within the 60 months preceding the disposition, 25% or more of the issued shares of any class of the capital stock of the Company.





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A Holder who is a resident of the United States and realizes a capital gain on disposition of Common Shares that was taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax thereon unless (a) more than 50% of the value of the Common Shares is derived from, or from an interest in, Canadian real estate, including Canadian mineral resources properties, (b) the Common Shares formed part of the business property of a permanent establishment that the Holder has or had in Canada within the 12 months preceding disposition, or (c) the Holder (i) was a resident of Canada at any time within the ten years immediately preceding the disposition, and for a total of 120 months during any period of 20 consecutive years, preceding the disposition, and (ii) owned the Common Shares when he ceased to be resident in Canada.



A Holder who is subject to Canadian tax in respect of a capital gain realized on disposition of Common Shares must include one half of the capital gain (taxable capital gain) in computing his taxable income earned in Canada.  The Holder may, subject to certain limitations, deduct one half of any capital loss (allowable capital loss) arising on disposition of taxable Canadian property from taxable capital gains realized in the year of disposition in respect to taxable Canadian property and, to the extent not so deductible, from such taxable capital gains of any of the three preceding years or any subsequent year.



United States Federal Income Tax Consequences



The following is a discussion of material United States Federal income tax consequences, under the law, generally applicable to a U.S. Holder (as defined below) of Common Shares.  This discussion does not cover any state, local or foreign tax consequences.



The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (the Code), Treasury Regulations, published Internal Revenue Service (IRS) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possible on a retroactive basis, at any time.  In addition, the discussion does not consider the potential effects, both adverse and beneficial, or recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time.  The discussion is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of Common Shares of the Company.  Each holder and prospective holder of Common Shares of the Company is advised to consult their own tax advisors about the federal, state, local, and foreign tax consequences of purchasing, owning and disposing of Common Shares of the Company applicable to their own particular circumstances.



U.S. Holders



As used herein, a (U.S. Holder) includes a holder of Common Shares of the Company who is a citizen or resident of the United States, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof, an estate whose income is taxable in the United States irrespective of source or a trust subject to the primary supervision of a court within the United States and control of a United States fiduciary as described in Section 7701(a)(30) of the Code.  This summary does not address the tax consequences to, and U.S. Holder does not include, persons subject to special provisions of Federal income tax law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals, persons or entities that have a functional currency other than the U.S. dollar, shareholders who hold Common Shares as part of a straddle, hedging or conversion transaction, and shareholders who acquired their Common Shares through the exercise of employee stock options or otherwise as compensation for services.  This summary is limited to U.S. Holders who own Common Shares as capital assets.  This summary does not address the consequences to a person or entity holding an interest in a shareholder or the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire Common Shares.





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Distribution of Common Shares



U.S. Holders receiving dividend distributions (including constructive dividends) with respect to common shares of the Company are required to include in gross income for United States Federal income tax purposes the gross amount of such distributions equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that the Company has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions.  Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holders United States Federal Income tax liability or, alternatively, for individuals may be deducted in computing the U.S. Holders United States Federal taxable income by those individuals who itemize deductions.  (See more detailed discussion at Foreign Tax Credit below).  To the extent that distributions exceed current or accumulated earnings and profits of the Company, they generally will be treated first as a return of capital up to the U.S. Holders adjusted basis in the common shares and thereafter as gain from the sale or exchange of the common shares. Dividend income will be taxed at marginal tax rates applicable to ordinary income while preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust.  There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.



In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Generally any gain or loss recognized upon a subsequent sale of other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss.



Dividends paid on the common shares of the Company will not generally be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations.  A U.S. Holder which is a corporation may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from the Company (unless the Company qualifies as a foreign personal holding company or a passive foreign investment company, as defined below) if such U.S. Holder owns shares representing at least 10% of the voting power and value of the Company.  The availability of this deduction is subject to several complex limitations which are beyond the scope of this discussion.



Under current Treasury Regulations, dividends paid on the Companys common shares, if any, generally will not be subject to information reporting and generally will not be subject to U.S. backup withholding tax. However, dividends and the proceeds from a sale of the Companys common shares paid in the U.S. through a U.S. or U.S. related paying agent (including a broker) will be subject to U.S. information reporting requirements and may also be subject to the 30% U.S. backup withholding tax, unless the paying agent is furnished with a duly completed and signed Form W-9. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against the U.S. Holders U.S. federal income tax liability, provided the required information is furnished to the IRS.





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Foreign Tax Credit



For individuals whose entire income from sources outside the United States consists of qualified passive income, the total amount of creditable foreign taxes paid or accrued during the taxable year does not exceed $300 ($600 in the case of a joint return) and an election is made under section 904(k), the limitation on credit does not apply.



A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of Common Shares of the Company may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld.  Generally, it will be more advantageous to claim a credit because a credit reduces United States Federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayers income subject to tax.  This election is made on a year-by-year basis and applies to all foreign income taxes (or taxes in lieu of income tax) paid by (or withheld from) the U.S. Holder during the year.  There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holders United States income tax liability that the U.S. Holders foreign source income bears to his/her or its worldwide taxable income in the determination of the application of this limitation.  The various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process.  In addition, this limitation is calculated separately with respect to specific classes of income such as passive income, high tax income, financial services income, and certain other classifications of income.  Dividends distributed by the Company will generally constitute passive income or, in the case of certain U.S. Holders, financial services income for these purposes.  The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and management urges holders and prospective holders of common shares of the Company to consult their own tax advisors regarding their individual circumstances.



Disposition of Common Shares



A U.S. Holder will recognize gain or loss upon the sale of Common Shares of the Company equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the shareholders tax basis in the Common Shares of the Company.  Preferential tax rates apply to long-term capital gains of U.S. Holders, which are individuals, estates or trusts.  This gain or loss will be capital gain or loss if the Common Shares are capital assets in the hands of the U.S. Holder, which will be a short-term or long-term capital gain or loss depending upon the holding period of the U.S. Holder.  Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year.  Deductions for net capital losses are subject to significant limitations.  For U.S. Holders which are not corporations, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted, but individuals may not carry back capital losses.  For U.S. Holders which are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years from the loss year and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.



Other Considerations



In the following circumstances, the above sections of the discussion may not describe the United States Federal income tax consequences resulting from the holding and disposition of Common Shares of the Company.





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Passive Foreign Investment Company



As a foreign corporation with U.S. Holders, the Company could potentially be treated as a passive foreign investment company (PFIC), as defined in Section 1297 of the Code, depending upon the percentage of the Companys income which is passive, or the percentage of the Companys assets which is held for the purpose of producing passive income.



Certain United States income tax legislation contains rules governing PFICs, which can have significant tax effects on U.S. shareholders of foreign corporations.  These rules do not apply to non-U.S. shareholders.  Section 1297(a) of the Code defines a PFIC as a corporation that is not formed in the United States and, for any taxable year, either (i) 75% or more of its gross income is passive income, which includes interest, dividends and certain rents and royalties or (ii) the average percentage, by fair market value (or, if the company is a controlled foreign corporation or makes an election, by adjusted tax basis), of its assets that produce or are held for the production of passive income is 50% or more.  The taxation of a US shareholder who owns stock in a PFIC is extremely complex and is therefore beyond the scope of this discussion.  Management urges US persons to consult with their own tax advisors with regards to the impact of these rules.



Controlled Foreign Corporation



A Controlled Foreign Corporation (CFC) is a foreign corporation more than 50% of whose stock by vote or value is, on any day in the corporations tax year, owned (directly or indirectly) by U.S. Shareholders.  If more than 50% of the voting power of all classes of stock entitled to vote is owned, actually or constructively, by citizens or residents of the United States, United States domestic partnerships and corporations or estates or trusts other than foreign estates or trusts, each of whom own actually or constructively 10% or more of the total combined voting power of all classes of stock of the Company, then the Company could be treated as a controlled foreign corporation under Subpart F of the Code.  This classification would affect many complex results, one of which is the inclusion of certain income of a CFC, which is subject to current U.S. tax. The United States generally taxes United States Shareholders of a CFC currently on their pro rata shares of the Subpart F income of the CFC. Such United States Shareholders are generally treated as having received a current distribution out of the CFCs Subpart F income and are also subject to current U.S. tax on their pro rata shares of the CFCs earnings invested in U.S. property.  The foreign tax credit described above may reduce the U.S. tax on these amounts. In addition, under Section 1248 of the Code, gain from the sale or exchange of shares by a U.S. Holder of common shares of the Corporation, and such U.S. Holder owned 10% or more of the voting power at any time during the five-year period ending with the sale or exchange is treated as ordinary income to the extent of earnings and profits of the Company (accumulated in corporate tax years beginning after 1962, but only while the shares were held and while the Company was controlled) attributable to the shares sold or exchanged. If a foreign corporation is both a PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC with respect to the United States Shareholders of the CFC.  This rule generally will be effective for taxable years of United States Shareholders beginning after 1986 and for taxable years of foreign corporations ending with or within such taxable years of United States Shareholders.  The PFIC provisions continue to apply in the case of PFIC that is also a CFC with respect to the U.S. Holders that are less than 10% shareholders.  Because of the complexity of Subpart F, a more detailed review of these rules is outside of the scope of this discussion.



The amount of any backup withholding will not constitute additional tax and will be allowed as a credit against the U.S. Holders federal income tax liability.





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Filing of Information Returns



Under a number of circumstances, a United States Investor acquiring Common Shares of the Company may be required to file an information return with the Internal Revenue Service Center where they are required to file their tax returns.  In particular, any U.S. Holder who becomes the owner, directly or indirectly, of 10% or more of the Common Shares of the Company will be required to file such a return.  Other filing requirements may apply, and management urges U.S. Holders to consult their own tax advisors concerning these requirements.



F.

Dividends and Paying Agents.



Not Applicable



G.

Statement by Experts.



Not Applicable



H.

Documents on Display.



The documents concerning the Company which are referred to in this Annual Report may be inspected at the Companys executive offices, located at Suite 650, 200 Burrard Street, Vancouver, BC V6C 3L6.



I.

Subsidiary Information.



Not Applicable



Item 11.

Quantitative and Qualitative Disclosures about Market Risk:



Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices.  Market prices are comprised of three types of risk: foreign currency risk, interest rate risk, and equity price risk.



Foreign Currency Risk



Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to fluctuations in foreign currencies through its operations in foreign countries. The Company monitors this exposure, but has no hedge positions. As at December 31, 2013, cash totalling $68,059 (December 31, 2012: $191,445) was held in US dollars, $694 (December 31, 2012: $741) in Nicaragua Cordoba, $4,213 (December 31, 2012: $4,706) in Guatemala Quetzal, $690 (December 31, 2012: $5,476) in Mexican Pesos and $709 (December 31, 2012: $715) in Peruvian Sols. Based on the above net exposures at December 31, 2013, a 10% depreciation or appreciation of the above currencies against the Canadian dollar would approximately result in a $7,400 increase or decrease in the Companys after tax net earnings, respectively.





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Interest Rate Risk



Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates.  The Company does not have any borrowings.  Interest rate risk is limited to potential decreases on the interest rate offered on cash held with chartered Canadian financial institutions.  The Company considers this risk to be limited.



Equity Price Risk



Equity price risk is the uncertainty associated with the valuation of assets arising from changes in equity markets.  The Companys available-for-sale investments are exposed to significant equity price risk due to the potentially volatile and speculative nature of the businesses in which the investments are held. The available-for-sale investments held in B2Gold, Focus, and Rackla are monitored by the Board with decisions on sale taken by Management.  A 10% decrease in fair value of the shares would approximately result in an $869,000 decrease in equity.



Item 12.

Description of Securities Other than Equity Securities.



Not Applicable



PART II



Item 13.

Defaults, Dividend Arrearages and Delinquencies.



None.



Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds.



None.



Item 15.

Controls and Procedures



Disclosure Controls and Procedures



Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms and that such information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.



The Companys management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has reviewed and evaluated the effectiveness of the Companys disclosure controls and procedures as of December 31, 2013. Based on that review and evaluation, management has concluded that the Companys disclosure controls and procedures are effective in providing management with all material information required to be disclosed in this annual report on a timely basis.





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Managements Annual Report on Internal Control over Financial Reporting



Management is responsible for establishing and maintaining adequate internal control over financial reporting. All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



Managements framework for evaluating the effectiveness of its internal controls is based upon the criteria established in Internal Control  Integrated Framework (1992)issued by the Committee of Sponsoring Organizations of the Treadway Commission.



As at December 31, 2013, management assessed the effectiveness of our internal controls over financial reporting and concluded that such internal controls over financial reporting are effective and that there were no material weaknesses in our internal controls over financial reporting.



Attestation Report of the Registered Accounting Firm.



This annual report does not include an attestation report of the Companys registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only managements report in this Annual Report.



Changes in Internal Controls Over Financial Reporting



There have been no changes, material or otherwise, in the Companys internal controls over financial reporting that occurred during the period covered by this annual report that has materially affected or are reasonably likely to materially affect, the Companys internal controls over financial reporting.



Item 16.

[Reserved]



Item 16A.

Audit Committee Financial Expert



The Company has identified among the three directors currently serving on the audit committee, William Katzin as an Audit Committee Financial Expert.  Mr. Katzin has been a Chartered Accountant for over 25 years and has experience working with resource and exploration companies.



Item 16B.

Code of Ethics



The Company has not adopted a formal written code of ethics given its relatively small size.  Directors and officers of the Company are subject to the laws of the Province of British Columbia, Canada, whereby they are required to act honestly, in good faith and in the best interests of the Company.





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Item 16C.

Principal Accountant Fees and Services



The chart below sets forth the total amounts billed the Company by BDO Canada LLP during the Companys fiscal years ended December 31, 2013 and 2012, and breaks down these amounts by category of service:



|                   |                         |        
|------------------ | ----------------------- | -------
|                   | Years ended December 31
|                   | 2013                    | 2012   
|Audit Fees         | $39,838                 | $73,725
|Audit Related Fees | -                       | -      
|Tax Fees           | $46,900                 | $8,500 
|All Other Fees     | -                       | -      
|Total              | $86,738                 | $82,225



Audit Fees are the aggregate fees billed for the audit of the Companys consolidated annual financial statements, as well as for IFRS transition assistance, U.S. filings review, and review of various transactions completed by the Company.



Audit-Related Fees are fees charged for assurance and related services that are reasonably related to the performance of the audit or review of the Companys financial statements and are not reported under Audit Fees.



Tax Fees are fees for professional services rendered for tax compliance, tax advice and tax planning.



All Other Fees are for amounts not included in the above categories.



Audit Committee's pre-approval policies and procedures



The Audit Committee nominates and engages the independent auditors to audit the financial statements, and approves all audit, audit-related services, tax services and other services provided by the Companys outside auditors.  Any services provided by the auditors that are not specifically included within the scope of the audit must be pre-approved by the audit committee prior to any engagement.  The audit committee is permitted to approve certain fees for audit-related services, tax services and other services pursuant to a de minimusexception before the completion of the engagement.  In 2013, none of the fees paid to the auditors were approved pursuant to the de minimusexception.



Item 16D.

Exemptions from the Listing Standards for Audit Committees.



Not Applicable



Item 16E.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers.



None





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Item 16F.

Changes in Registrants Certifying Accountant.



None



Item 16G.

Corporate Governance.



Not applicable



Item 16H.

Mine Safety Disclosure.



Not applicable



PART III



Item 17.

Financial Statements.



Not Applicable



Item 18.

Financial Statements.



The Companys Consolidated Financial Statements are stated in Canadian Dollars and are prepared in accordance with IFRS as issued by the IASB, effective with the Companys transition to IFRS on January 1, 2010.



The Consolidated Financial Statements of the Company as required under Item 18 of Form 20-F attached hereto are individually listed under Item 19, and are found immediately following the text of this Annual Report.  The audit report of BDO Canada LLP, Chartered Accountants is included herein immediately preceding the Consolidated Financial Statements.



Item 19.

Exhibits.



Financial Statements



The Consolidated Financial Statements of the Corporation and exhibits listed below are filed with this Annual Report on Form 20-F in the United States.





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The following financial statements are attached to and form part of this Annual Report:

|                                                                                                             
|-------------------------------------------------------------------------------------------------------------
|Consolidated Financial Statements of the Company                                                             
|-
Independent Auditors Report of BDO Canada LLP, Chartered Accountants                                      
|-
Consolidated Statements of Financial Position as at December 31, 2013 and 2012                             
|-
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2013, 2012 and 2011
|-
Consolidated Statements of Changes in Equity for the years ended December 31, 2013, 2012 and 2011          
|-
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011                 
|-
Notes to the Consolidated Financial Statements for the year ended December 31, 2013                        

Exhibits

The following exhibits are attached to and form part of this Annual Report:

|            |                                                                            
|----------- | ---------------------------------------------------------------------------
|Exhibit No. | Description                                                                
|1 (1)       | Certificate of Amalgamation and Articles of the Company dated July 1, 2004.
|4 (2)       | Agreement dated November 3, 2011 between the Company and Rackla Metals Inc.
|4 (2)       | Agreement dated April 6, 2012 between the Company and B2Gold Corp.         
|8 (3)       | List of Subsidiaries                                                       
|31.1        | Section 302 Certification of the President, C.E.O. and C.F.O.              
|32.1        | Section 906 Certification of the President, C.E.O. and C.F.O.              



(1)

Incorporated by reference to the Companys Form 20-F Registration Statement dated July 13, 2005.

(2)

Incorporated by reference to the Companys Form 20F Registration Statement dated April 16, 2012.

(3)

See Item 4.C, Organizational Structure, herein.





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[radius2013_form20fannual002.jpg]





(An Exploration Stage Company)



CONSOLIDATED FINANCIAL STATEMENTS



FOR THE YEAR ENDED DECEMBER 31, 2013

(Expressed in Canadian Dollars)







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|                                  |                                                  |                                                                                         
|--------------------------------- | ------------------------------------------------ | ----------------------------------------------------------------------------------------
|[radius2013_form20fannual004.gif] | Tel: 604  688 5421
Fax: 604  688 5132
www.bdo.ca | BDO Canada LLP
600 Cathedral Place
925 West Georgia Street
Vancouver BC  V6C 3L2  Canada





Report of Independent Registered Public Accounting Firm





To the shareholders of Radius Gold Inc.



We have audited the accompanying consolidated financial statements of Radius Gold Inc. and its subsidiaries, which comprise the consolidated statements of financial position as at December 31, 2013 and 2012, and the consolidated statements of comprehensive income (loss), changes in equity and cash flows for each of the years in the three-year period ended December 31, 2013, and a summary of significant accounting policies and other explanatory information.



Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, as issued by the IASB, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.



Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.



An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the presentation of the consolidated financial statements.



We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.



Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Radius Gold Inc. and its subsidiaries as at December 31, 2013 and 2012, and its financial performance and cash flows for each of the years in the three-year period ended December 31, 2013, in accordance with International Financial Reporting Standards, as issued by the IASB.



(signed)  BDO CANADA LLP



Chartered Accountants

Vancouver, British Columbia

April 29, 2014





BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.





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RADIUS GOLD INC.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian Dollars)

|                                                   |                   |                  
|-------------------------------------------------- | ----------------- | -----------------
|As at:                                             | December 31,      | December 31,     
|                                                   | 2013              | 2012             
|                                                   |                   |                  
|ASSETS                                             |                   |                  
|                                                   |                   |                  
|Current assets                                     |                   |                  
|Cash and cash equivalents (Note 5)                 | $      1,560,788  | $        994,367 
|Available-for-sale investments (Note 6)            | 8,687,428         | 16,550,166       
|Advances and other receivables                     | 63,293            | 40,150           
|Taxes receivable                                   | 11,426            | 49,203           
|Due from related parties (Note 14)                 | 33,817            | 116,947          
|Prepaid expenses and deposits (Note 14)            | 143,981           | 194,078          
|Total current assets                               | 10,500,733        | 17,944,911       
|                                                   |                   |                  
|Non-current assets                                 |                   |                  
|Long-term deposits                                 | 134,623           | 73,623           
|Property and equipment (Note 7)                    | 153,102           | 199,606          
|Exploration and evaluation assets  (Notes 8 and 9) | 531,369           | 531,369          
|Investment in associate (Note 8)                   | 1                 | 493,319          
|Total non-current assets                           | 819,095           | 1,297,917        
|                                                   |                   |                  
|TOTAL ASSETS                                       | $    11,319,828   | $    19,242,828  
|                                                   |                   |                  
|LIABILITIES AND SHAREHOLDERS' EQUITY               |                   |                  
|                                                   |                   |                  
|Current liabilities                                |                   |                  
|Accounts payable and accrued liabilities (Note 14) | $         103,059 | $         255,301
|Total liabilities                                  | 103,059           | 255,301          
|                                                   |                   |                  
|Shareholders' equity                               |                   |                  
|Share capital  (Note 11)                           | 56,592,613        | 56,592,613       
|Other equity reserve                               | 6,636,658         | 6,636,658        
|Deficit                                            | (53,137,013)      | (44,849,250)     
|Accumulated other comprehensive income             | 1,124,511         | 607,506          
|Total shareholders' equity                         | 11,216,769        | 18,987,527       
|                                                   |                   |                  
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY         | $    11,319,828   | $    19,242,828  



Events after the reporting date  Note 19



APPROVED ON BEHALF OF THE BOARD OF DIRECTORS AND AUTHORIZED FOR ISSUE ON APRIL 29, 2014 BY:



Simon Ridgway, Director

Ralph Rushton, Director

Simon Ridgway

Ralph Rushton



The accompanying notes form an integral part of these consolidated financial statements





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RADIUS GOLD INC.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the years ended December 31, 2013, 2012 and 2011

(Expressed in Canadian Dollars)

|                                                             |                 |                 |                
|------------------------------------------------------------ | --------------- | --------------- | ---------------
|                                                             | 2013            | 2012            | 2011           
|                                                             |                 |                 |                
|EXPLORATION EXPENDITURES                                     | $     1,039,309 | $       884,966 | $     6,390,053
|GENERAL AND ADMINISTRATIVE EXPENSES                          |                 |                 |                
|Amortization                                                 | 47,738          | 53,865          | 58,334         
|Communications (Note 14)                                     | 8,616           | 9,834           | 18,798         
|Consulting fees (Note 14)                                    | 28,000          | 127,826         | 114,544        
|Donations                                                    | -               | 11,973          | 1,593          
|Legal and audit fees                                         | 99,698          | 186,062         | 132,763        
|Management fees (Note 14)                                    | 79,500          | 141,000         | 60,000         
|Office and miscellaneous (Note 14)                           | 75,729          | 43,182          | 62,186         
|Property investigations (Note 14)                            | 101,009         | 19,685          | -              
|Public relations (Note 14)                                   | 34,792          | 68,301          | 124,662        
|Rent and utilities (Note 14)                                 | 50,321          | 58,356          | 25,714         
|Repair and maintenance (Note 14)                             | 9,209           | 29,450          | 27,802         
|Salaries and benefits (Note 14)                              | 248,635         | 264,951         | 216,435        
|Share-based compensation (Notes 12 and 14)                   | -               | 385,320         | 306,915        
|Transfer agent and regulatory fees (Note 14)                 | 18,302          | 17,192          | 25,659         
|Travel and accommodation (Note 14)                           | 42,507          | 81,621          | 67,058         
|                                                             | 844,056         | 1,498,618       | 1,242,463      
|Loss before other income/(expenses)                          | (1,883,365)     | (2,383,584)     | (7,632,516)    
|                                                             |                 |                 |                
|OTHER INCOME (EXPENSES)                                      |                 |                 |                
|Share of post-tax losses of associate (Note 8)               | (493,318)       | (366,950)       | (6,250)        
|Impairment on shares held in associate (Note 8)              | -               | (855,632)       | -              
|Gain on distribution (Note 8)                                | -               | -               | 4,807,443      
|Plan of arrangement costs (Note 8)                           | -               | -               | (289,313)      
|Foreign currency exchange gain (loss)                        | 4,007           | (13,062)        | 15,134         
|Gain on sale of properties (Note 9)                          | -               | 16,278,410      | -              
|Loss on disposal of property (Note 9)                        | -               | (3,823,118)     | -              
|Gain (loss) on disposal of property and equipment            | -               | (41,780)        | 2,886          
|Gain on sale of marketable securities                        | 81,217          | 46,065          | -              
|Impairment on available-for-sale investment (Notes 6 and 18) | (5,934,443)     | (20,148)        | (465,925)      
|Gain from mineral property option agreements                 | 98,590          | 101,564         | 157,088        
|Investment income                                            | 22,141          | 8,883           | 61,397         
|Write off of exploration and evaluation costs (Note 9)       | (171,815)       | -               | -              
|Write off of receivables (Note 9)                            | (10,777)        | (1,291)         | -              
|Income (loss) before income taxes                            | (8,287,763)     | 8,929,357       | (3,350,056)    
|Deferred income tax recovery (Note 13)                       | -               | -               | 716,754        
|Net income (loss) for the year                               | $   (8,287,763) | $     8,929,357 | $   (2,633,302)
|Other comprehensive income                                   |                 |                 |                
|Fair value gains on available-for-sale investments
(Note 6)  | 517,005         | 97,132          | 631,891        
|Total comprehensive income (loss)                            | $   (7,770,758) | $    9,026,489  | $   (2,001,411)
|Basic and diluted earnings (loss) per share (Note 3)         | $(0.10)         | $0.10           | $(0.03)        
|Weighted average number of common shares outstanding         | 86,675,617      | 86,675,617      | 83,231,679     





The accompanying notes form an integral part of these consolidated financial statements





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RADIUS GOLD INC.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the years ended December 31, 2013, 2012 and 2011

(Expressed in Canadian Dollars)





|                                                         |                         |                       |                       |                                               |                      |                      
|-------------------------------------------------------- | ----------------------- | --------------------- | --------------------- | --------------------------------------------- | -------------------- | ---------------------
|                                                         | Number of common shares | Share capital         | Other equity reserve  | Accumulated other comprehensive income (loss) | Deficit              | Total                
|Balance, December 31, 2010                               | 79,727,539              | $          52,631,209 | $           5,966,627 | $              (121,517)                      | $       (45,078,001) | $          13,398,318
|Loss for the year                                        | -                       | -                     | -                     | -                                             | (2,633,302)          | (2,633,302)          
|Shares issued for private placements                     | 6,100,000               | 3,660,000             | -                     | -                                             | -                    | 3,660,000            
|Shares issued for finders' fees                          | 199,250                 | 119,550               | -                     | -                                             | -                    | 119,550              
|Shares issued for property acquisition                   | 159,512                 | 119,700               | -                     | -                                             | -                    | 119,700              
|Options exercised                                        | 105,000                 | 37,250                | -                     | -                                             | -                    | 37,250               
|Warrants exercised                                       | 384,316                 | 195,448               | -                     | -                                             | -                    | 195,448              
|Transfer of other equity reserve on
exercise of options  | -                       | 33,213                | (33,213)              | -                                             | -                    | -                    
|Transfer of other equity reserve on
exercise of warrants | -                       | 22,252                | (22,252)              | -                                             | -                    | -                    
|Share issuance costs                                     | -                       | (226,009)             | 33,261                | -                                             | -                    | (192,748)            
|Available-for-sale investments                           | -                       | -                     | -                     | 631,891                                       | -                    | 631,891              
|Fair value of distributed assets                         | -                       | -                     | -                     | -                                             | (6,067,304)          | (6,067,304)          
|Share-based compensation                                 | -                       | -                     | 306,915               | -                                             | -                    | 306,915              
|Balance, December 31, 2011                               | 86,675,617              | 56,592,613            | 6,251,338             | 510,374                                       | (53,778,607)         | 9,575,718            
|Income for the year                                      | -                       | -                     | -                     | -                                             | 8,929,357            | 8,929,357            
|Available-for-sale investments                           | -                       | -                     | -                     | 97,132                                        | -                    | 97,132               
|Share-based compensation                                 | -                       | -                     | 385,320               | -                                             | -                    | 385,320              
|Balance, December 31, 2012                               | 86,675,617              | 56,592,613            | 6,636,658             | 607,506                                       | (44,849,250)         | 18,987,527           
|Loss for the year                                        | -                       | -                     | -                     | -                                             | (8,287,763)          | (8,287,763)          
|Available-for-sale investments                           | -                       | -                     | -                     | 517,005                                       | -                    | 517,005              
|Balance, December 31, 2013                               | 86,675,617              | $       56,592,613    | $          6,636,658  | $        1,124,511                            | $      (53,137,013)  | $       11,216,769   



The accompanying notes form an integral part of these consolidated financial statements





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RADIUS GOLD INC.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2013, 2012 and 2011

(Expressed in Canadian Dollars)



|                                                                     |                       |                     |                   
|-------------------------------------------------------------------- | --------------------- | ------------------- | ------------------
|                                                                     | 2013                  | 2012                | 2011              
|Cash provided by (used in):                                          |                       |                     |                   
|OPERATING  ACTIVITIES                                                |                       |                     |                   
|Net income (loss) for the year                                       | $         (8,287,763) | $         8,929,357 | $      (2,633,302)
|Items not involving cash:                                            |                       |                     |                   
|Amortization                                                         | 47,738                | 53,839              | 58,334            
|Gain from mineral property option agreements                         | (98,590)              | (101,564)           | (157,088)         
|Gain on sale of exploration and evaluation asset (Note 9)            | -                     | (16,278,410)        | -                 
|Loss from disposal of exploration and evaluation asset (Note 9)      | -                     | 3,823,118           | -                 
|Loss (gain) from disposal of property and equipment                  | -                     | 41,780              | (2,886)           
|Write off of exploration and evaluation assets                       | 171,815               | -                   | -                 
|Write off of receivables                                             | 10,777                | 1,291               | -                 
|Investment income                                                    | (22,141)              | (8,883)             | (61,397)          
|Impairment of available-for-sale investments (Notes 6 and 18)        | 5,934,443             | 20,148              | 465,925           
|Impairment of shares held in associate                               | -                     | 855,632             | -                 
|Gain on sale of marketable securities                                | (81,217)              | (46,065)            | -                 
|Gain on distribution                                                 | -                     | -                   | (4,807,443)       
|Share of post-tax losses of associate                                | 493,318               | 366,950             | 6,250             
|Deferred income tax recovery                                         | -                     | -                   | (716,754)         
|Share-based compensation                                             | -                     | 385,320             | 306,915           
|                                                                     | (1,831,620)           | (1,957,461)         | (7,541,446)       
|Changes in non-cash working capital items:                           |                       |                     |                   
|Advances and other receivables                                       | (33,920)              | 295,770             | (463,329)         
|Taxes receivable                                                     | 37,777                | 312,494             | (266,193)         
|Prepaid expenses and deposits                                        | (10,903)              | 155,755             | (204,685)         
|Long-term deposits                                                   | -                     | (3,198)             | (46,544)          
|Due from related parties                                             | 83,130                | 424,942             | (365,381)         
|Accounts payable and accrued liabilities                             | (152,242)             | (520,138)           | 227,461           
|                                                                     | (1,907,778)           | (1,291,836)         | (8,660,117)       
|FINANCING ACTIVITIES                                                 |                       |                     |                   
|Costs of issue of shares                                             | -                     | -                   | (73,198)          
|Proceeds on issuance of common shares                                | -                     | -                   | 3,892,698         
|                                                                     | -                     | -                   | 3,819,500         
|INVESTING  ACTIVITIES                                                |                       |                     |                   
|Cash distributed on distribution of Rackla Metal shares              | -                     | -                   | (1,000,000)       
|Investment in associate (Note 8)                                     | -                     | (215,254)           | -                 
|Expenditures on exploration and evaluation asset
acquisition costs   | (171,815)             | -                   | (191,919)         
|Investment income                                                    | 22,141                | 8,883               | 61,397            
|Proceeds from mineral property option agreements                     | 49,295                | 50,782              | 106,206           
|Proceeds from disposal of mineral property (Note 9)                  | -                     | 98,750              | -                 
|Expenses incurred on sale of mineral property rights (Note 9)        | -                     | (304,746)           | -                 
|Proceeds from sale of marketable securities and investments (Note 6) | 2,575,812             | 928,365             | 1,412             
|Proceeds from sale of property and equipment                         | -                     | 4,078               | 24,477            
|Purchase of property and equipment (Note 7)                          | (1,234)               | (48,229)            | (113,599)         
|                                                                     | 2,474,199             | 522,629             | (1,112,026)       
|Foreign exchange on opening cash and cash equivalents                | -                     | -                   | 870               
|Increase/(decrease) in cash and cash equivalents                     | 566,421               | (769,207)           | (5,951,773)       
|Cash and cash equivalents - beginning of year                        | 994,367               | 1,763,574           | 7,715,347         
|Cash and cash equivalents - end of year                              | $           1,560,788 | $           994,367 | $       1,763,574 



The accompanying notes form an integral part of these consolidated financial statements





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Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



1.

CORPORATE INFORMATION



Radius Gold Inc. (the Company) was formed by the amalgamation of Radius Explorations Ltd. and PilaGold Inc. effective on July 1, 2004.



The Company is domiciled in Vancouver, Canada and is engaged in acquisition and exploration of mineral properties located primarily in Central America. The address of the Companys head office is #650  200 Burrard Street, Vancouver, BC, Canada V6C 3L6.



2.

BASIS OF PREPARATION



Statement of Compliance



These consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).



Basis of Measurement



These consolidated financial statements have been prepared on the historical cost basis, as modified by any revaluation of available-for-sale financial assets.



The consolidated financial statements are presented in Canadian dollars (CDN), which is also the Companys functional currency.



The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Companys accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4.



Nature of Operations



At December 31, 2013, the Company had no revenue producing operations and had accumulated losses of $53,137,013 since inception. However, the Company has sufficient cash resources and a working capital surplus of $10.4 million to meet its obligations for at least the next twelve months from the end of the reporting year. The Company will periodically have to raise funds to continue operations and, although it has been successful in doing so in the past, there is no assurance it will be able to do so in the future.



These financial statements have been presented on the basis that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  Realization values may be substantially different from the carrying values shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.





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Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



The accounting policies set out below have been applied consistently to all years presented in these consolidated financial statements.



a)

Basis of Consolidation



These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. A wholly owned subsidiary is an entity in which the Company has control, directly or indirectly, where control is defined as the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. All material intercompany transactions and balances have been eliminated on consolidation. Subsidiaries are deconsolidated from the date control ceases.



Details of the Companys principal subsidiaries at December 31, 2013 are as follows:



| |                                |                        |            |                    
| | ------------------------------ | ---------------------- | ---------- | -------------------
| | Name                           | Place of
Incorporation | Interest
% | Principal Activity 
| | Minerales Sierra Pacifico S.A. | Guatemala              | 100%       | Exploration company
| | Minerales de Nicaragua S.A.    | Nicaragua              | 100%       | Exploration company
| | Geometales Del Norte-Geonorte  | Mexico                 | 100%       | Exploration company
| | Radius (Cayman) Inc            | Cayman Islands         | 100%       | Holding company    



b)

Investment in Associates



Where the Company has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate. Associates are initially recognized in the consolidated statement of financial position at cost. The Company's share of post-acquisition profits and losses is recognized in the consolidated statement of comprehensive income (loss), except that losses in excess of the Companys investment in the associate are not recognized unless there is an obligation to fund those losses.



Profits and losses arising on transactions between the Company and its associates are recognized only to the extent of unrelated investors' interests in the associate. The investor's share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the associate.



Any premium paid for an associate above the fair value of the Company's share of the identifiable assets, liabilities and contingent liabilities acquired is capitalized and included in the carrying amount of the associate. Where there is objective evidence that the investment in an associate has been impaired the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.





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Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (contd)



c)

Foreign Currency Translation



The functional and presentation currency of the Company and its principal subsidiaries is the Canadian dollar. Transactions denominated in a currency other than an entitys functional currency are translated as follows: unsettled monetary items denominated in a foreign currency are translated into Canadian dollars at exchange rates prevailing at the date of the statement of financial position and non-monetary items are translated at exchange rates prevailing when the assets were acquired or obligations incurred. Foreign currency denominated revenue and expense items are translated at exchange rates prevailing at the transaction date.  Gains or losses arising from the translations are included in operations.



d)

Cash and Cash Equivalents



Cash and cash equivalents includes cash at banks and on hand, and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and are subject to an insignificant risk of change of value.



e)

Mineral Exploration and Evaluation Expenditures



Acquisition costs for exploration and evaluation assets are capitalized and include the cash consideration paid and the fair value of common shares issued on acquisition, at the earlier of the date the counterpartys performance is complete or the share issuance date.. Exploration expenditures, net of recoveries, are charged to operations as incurred.  After a property is determined by management to be commercially feasible, exploration and development expenditures on the property will be capitalized. On transfer to development properties, capitalized exploration and evaluation assets are assessed for impairment.



Options are exercisable entirely at the discretion of the optionee and amounts received from optionees in connection with option agreements are credited against the capitalized acquisition costs classified as exploration and evaluation assets on the statement of financial position and amounts received in excess are credited to gain from exploration and evaluation asset option agreements on the statement of operations.



Where the Company has entered into option agreements to acquire interests in exploration and evaluation assets that provide for periodic payments or periodic share issuances, amounts unpaid and unissued are not recorded as liabilities since they are payable and issuable entirely at the Companys option. Option payments are recorded as exploration and evaluation costs when the payments are made or received and the share issuances are recorded as exploration and evaluation costs using the fair market value of the Companys common shares at the earlier of the date the counterpartys performance is complete or the share issuance date.



The Company is in the process of exploring and developing its exploration and evaluation assets and has not yet determined the amount of reserves available. Management reviews the carrying value of exploration and evaluation assets on a periodic basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, the Company will test the asset for impairment based upon a variety of factors, including current exploration results, the prospect of further work being carried out by the Company, the assessment of future probability of profitable revenues from the asset or from the sale of the asset. Amounts shown for exploration and evaluation assets represent costs incurred net of write-downs and recoveries, and are not intended to represent present or future values.



Environmental expenditures that relate to current operations are expensed or capitalized as appropriate.  Expenditures that relate to an existing condition caused by past operations and which do not contribute to current or future revenue generation are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated.  Generally, the timing of these accruals would be when the actual environmental disturbance occurs.





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Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (contd)



f)

Property, Equipment and Amortization



Recognition and Measurement



On initial recognition, property and equipment are valued at cost, being the purchase price and directly attributable costs of acquisition required to bring the asset to the location and condition necessary to be capable of operating in a manner intended by the Company, including appropriate borrowing costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is recognized within provisions.



Property and equipment is subsequently measured at cost less accumulated amortization, less any accumulated impairment losses, with the exception of land, which is not amortized.



When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment.



Subsequent Costs



The cost of replacing part of an item of property and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of day-to-day servicing of property and equipment are recognized in profit or loss as they are incurred.



Major Maintenance and Repairs



Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred.



Gains and Losses



Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount, that are recognized net within other income in profit or loss.



Amortization



Amortization is recognized in profit or loss and property and equipment is amortized over their estimated useful lives using the following methods:



| |                         |                            
| | ----------------------- | ---------------------------
| | Leasehold improvements  | 7  8 years straight-line  
| | Trucks                  | 4  8 years straight-line  
| | Computer equipment      | 25% - 50% declining balance
| | Field equipment         | 30% declining balance      
| | Furniture and equipment | 20% declining balance      
| | Geophysical equipment   | 20% declining balance      



Additions to equipment are amortized at one-half rate during the year of acquisition.





| |        | 
| | ------ | 
| | - 62 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (contd)



g)

Earnings / Loss per Share



Basic income/(loss) per share is calculated by dividing the net income/(loss) available to common shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share reflects the potential dilution of securities that could share in earnings of an entity.



For the years ended December 31, 2013, 2012 and 2011, potentially dilutive common shares (relating to options and warrants outstanding at year-end) totalling 4,915,000 (2012: 14,945,001; 2011: 15,945,737) were not included in the computation of earnings/(loss) per share, because their effect was anti-dilutive (2012: were out of the money; 2011: their effect was anti-dilutive).  As such, basic and diluted earnings and losses per share are the same for the periods presented.



h)

Income Taxes



Income tax expense comprises current and deferred tax. Current and deferred tax are recognized in net loss/income except to the extent that it relates to a business combination or items recognized directly in equity or in other comprehensive loss/income.



Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss for the current year and any adjustment to income taxes payable in respect of previous years. Current income taxes are determined using tax rates and tax laws that have been enacted or substantively enacted by the year-end date.



Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax base, except for those taxable temporary differences arising on the initial recognition of goodwill or on the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss.



Recognition of deferred tax assets for unused tax losses, tax credits and deductible temporary differences is restricted to those instances where it is probable that future taxable profit will be available against which the deferred tax asset can be utilized. At the end of each reporting year the Company reassesses unrecognized deferred tax assets. The Company recognizes a previously unrecognized deferred tax asset only to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.



i)

Share Capital



Equity instruments are contracts that give a residual interest in the net assets of the Company. Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Companys common shares, share warrants, and options are classified as equity instruments.



Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds.



Warrants issued by the Company typically accompany an issuance of shares in the Company (a Unit), and entitle the warrant holder to exercise the warrants for a stated price and a stated number of common shares in the Company. The fair value of the Units components sold is measured using the residual value approach.





| |        | 
| | ------ | 
| | - 63 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (contd)



j)

Share-based Payments



Where equity-settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the statement of comprehensive loss/income over the vesting period. Performance vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options that eventually vest. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether these vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.



Where terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the statements of comprehensive loss/income over the remaining vesting period.



Where equity instruments are granted to employees, they are recorded at the fair value of the equity instrument granted at the grant date. The grant date fair value is recognized in comprehensive loss/income over the vesting period, described as the period during which all the vesting conditions are to be satisfied.



Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received in the statement of comprehensive loss/income. Options or warrants granted related to the issuance of shares are recorded as a reduction of share capital.



When the value of goods or services received in exchange for the share-based payment cannot be reliably estimated, the fair value is measured by use of a valuation model or the fair value of the shares granted.



All equity-settled share-based payments are reflected in other equity reserve, until exercised. Upon exercise, shares are issued from treasury and the amount reflected in other equity reserve is credited to share capital, adjusted for any consideration paid.



Where a grant of options is cancelled or settled during the vesting period, excluding forfeitures when vesting conditions are not satisfied, the Company immediately accounts for the cancellation as an acceleration of vesting and recognizes the amount that otherwise would have been recognized for services received over the remainder of the vesting period. Any payment made to the employee on the cancellation is accounted for as the repurchase of an equity interest except to the extent the payment exceeds the fair value of the equity instrument granted, measured at the repurchase date.  Any such excess is recognized as an expense.



k)

Provisions



Rehabilitation Provision



The Company is subject to various government laws and regulations relating to environmental disturbances caused by exploration and evaluation activities. The Company records the present value of the estimated costs of legal and constructive obligations required to restore the exploration sites in the year in which the obligation is incurred. The nature of the rehabilitation activities may include restoration, reclamation and revegetation of the affected exploration sites.



The rehabilitation provision generally arises when the environmental disturbance is subject to government laws and regulations. When the liability is recognized, the present value of the estimated costs is capitalized by increasing the carrying amount of the related exploration properties. Over time, the discounted liability is increased for the changes in present value based on current market discount rates and liability specific risks.



The company has determined that there are no rehabilitation provisions as at December 31, 2013 and 2012.





| |        | 
| | ------ | 
| | - 64 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (contd)



k)

Provisions (contd)



Other Provisions



Provisions are recognized where a legal or constructive obligation has been incurred as a result of past events, it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. If material, provisions are measured at the present value of the expenditures expected to be required to settle the obligation. The increase in any provision due to passage of time is recognized as accretion expense.



l)

Impairment of Non-Financial Assets



Impairment tests on non-financial assets, including exploration and evaluation assets are undertaken whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount, which is the higher of value in use and fair value less costs to sell, the asset is written down accordingly.



Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the assets cash-generating unit, which is the lowest group of assets in which the asset belongs for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets.



An impairment loss is charged to the profit or loss, except to the extent they reverse gains previously recognized in other comprehensive loss/income.



m)

Financial Instruments



Financial Assets



Financial assets are classified into one of the following categories based on the purpose for which the asset was acquired. All transactions related to financial instruments are recorded on a trade date basis. The Companys accounting policy for each category is as follows:



Loans and Receivables



These assets are non-derivative financial assets resulting from the delivery of cash or other assets by a lender to a borrower in return for a promise to repay on a specified date or dates, or on demand.  They are initially recognized at fair value plus transaction costs that are directly attributable to their acquisition or issue and subsequently carried at amortized cost, using the effective interest rate method, less any impairment losses. Amortized cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transactions costs. Gains or losses are recognized in profit or loss when the loans and receivables are derecognized or impaired, as well as through the amortization process.



TheCompanys loans and receivables comprise advances and other receivables, due from related parties, deposits and cash and cash equivalents in the consolidated statement of financial position.





| |        | 
| | ------ | 
| | - 65 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (contd)



m)

Financial Instruments (contd)



Available-For-Sale Investments



Non-derivative financial assets not included in the other categories are classified as available-for-sale and comprise principally the Companys strategic investments in entities not qualifying as subsidiaries or associates.  Available-for-sale investments are carried at fair value with changes in fair value recognized in accumulated other comprehensive loss/income. Where there is a significant or prolonged decline in the fair value of an available-for-sale financial asset (which constitutes objective evidence of impairment), the full amount of the impairment, including any amount previously recognized in other comprehensive loss/income, is recognized in profit or loss. Any subsequent increased in the fair value of available-for-sale investments are recorded through other comprehensive income. If there is no quoted market price in an active market and fair value cannot be readily determined, available-for-sale investments are carried at cost.



Purchases and sales of available-for-sale financial assets are recognized on a trade date basis. On sale or impairment, the cumulative amount recognized in other comprehensive loss/income is reclassified from accumulated other comprehensive loss/income to profit or loss.



Impairment of Financial Assets



At each reporting date the Company assesses whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or group of financial assets is deemed to be impaired, if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset and that event has an impact on the estimated future cash flows of the financial asset or group of financial assets.



Financial Liabilities



Financial liabilities are classified as other financial liabilities, based on the purpose for which the liability was incurred, and comprise accounts payables and accrued liabilities. These liabilities are initially recognized at fair value net of any transaction costs directly attributable to the issuance of the instrument and subsequently carried at amortized cost using the effective interest rate method. This ensures that any interest expense over the period of repayment is at a constant rate on the balance of the liability carried in the statement of financial position.  Interest expense, in this context, includes initial transaction costs and premiums payable on redemption, as well as any interest or coupon payable while the liability is outstanding.



Accounts payables represent liabilities for goods and services provided to the Company prior to the end of the period which are unpaid. Accounts payable amounts are unsecured and are usually paid within forty-five days of recognition.



The Company has made the following designations of its financial instruments:



| |                                          |  |                                    
| | ---------------------------------------- |  | -----------------------------------
| | Cash and cash equivalent                 |  | Loans and receivables              
| | Investments in publicly-listed companies |  | Available-for-sale financial assets
| | Advances and other receivables           |  | Loans and receivables              
| | Amounts due from related parties         |  | Loans and receivables              
| | Deposits                                 |  | Loans and receivables              
| | Accounts payable and accrued liabilities |  | Other financial liabilities        





| |        | 
| | ------ | 
| | - 66 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (contd)



n)

Adoption of New and Amended IFRS Pronouncements



Effective January 1, 2013, the Company adopted the following new and revised International Financial Reporting Standards (IFRS) that were issued by the International Accounting Standards Board (IASB).



IAS 1 Presentation of Financial Statements (Amendment)



The amendments to IAS 1 require the grouping of items within other comprehensive income that may be reclassified to profit or loss and those that will not be reclassified. The only item in accumulated other comprehensive income relates to fair value adjustments on available-for-sale investments. The statement of comprehensive income/loss in these consolidated financial statements has been amended to reflect the presentation requirements under the amended IAS 1.



IFRS 7 Financial Statements: Disclosures



The amendment to IFRS 7 enhances the disclosure required when offsetting financial assets and liabilities. The application of this IFRS did not have a material impact on the amounts reported for the current or prior years but may affect the accounting for future transactions or arrangements.



IFRS 10 Consolidated Financial Statements



IFRS 10 requires an entity to consolidate an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Under existing IFRS, consolidation is required when an entity has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. IFRS 10 replaces SIC-12 Consolidation - Special Purpose Entities and parts of IAS 27 Consolidated and Separate Financial Statements. The application of the IFRS did not have a material impact on the amounts reported for the current or prior years but may affect the accounting for future transactions or arrangements.



IFRS 11 Joint Arrangements



IFRS 11 requires a venturer to classify its interest in a joint arrangement as a joint venture or joint operation. Joint ventures will be accounted for using the equity method of accounting whereas for a joint operation the venturer will recognize its share of the assets, liabilities, revenue and expenses of the joint operation. The application of the IFRS did not have a material impact on the amounts reported for the current or prior years but may affect the accounting for future transactions or arrangements.



IFRS 12 Disclosure of Interests in Other Entities



IFRS 12 establishes disclosure requirements for interests in other entities, such as joint arrangements, associates, special purpose vehicles and off balance sheet vehicles. The standard carries forward existing disclosures and also introduces significant additional disclosure requirements that address the nature of, and risks associated with, an entitys interests in other entities. The application of the IFRS did not have a material impact on the amounts reported for the current or prior years but may affect the accounting for future transactions or arrangements.



IFRS 13 Fair Value Measurement



IFRS 13 is a comprehensive standard for fair value measurement and disclosure requirements for use across all IFRS standards. The new standard clarifies that fair value is the price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction between market participants, at the measurement date. It also establishes disclosures about fair value measurement. The application of the IFRS did not have a material impact on the amounts reported for the current or prior years but may affect the accounting for future transactions or arrangements.





| |        | 
| | ------ | 
| | - 67 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (contd)



o)

Standards, Amendments and Interpretations Not Yet Effective



The following new standards have been issued by the IASB but are not yet effective:



IFRS 9 Financial Instruments



IFRS 9 is part of the IASB's wider project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortized cost and fair value. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. The standard is effective for annual periods beginning on or after January 1, 2015. The Company is in the process of evaluating the impact of the new standard.



IAS 24 Related Party Disclosures



The amendments to IAS 24 clarify that a management entity, or any member of a group of which it is a part, that provides key management services to a reporting entity, or its parent, is a related party of the reporting entity. The amendments also require an entity to disclose amounts incurred for key management personnel services provided by a separate management entity. This replaces the more detailed disclosure by category required for other key management personnel compensation. The amendments will only affect disclosure and are effective for annual periods beginning on or after January 1, 2014. The Company is currently evaluating the impact the final standard is expected to have on its consolidated financial statements.



IFRIC 21 Levies



The IASB issued IFRIC 21  Levies (IFRIC 21), an interpretation of IAS 37  Provisions, Contingent Liabilities and Contingent Assets (IAS 37), on the accounting for levies imposed by governments. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (Obligating Event). IFRIC 21 clarifies that the Obligating Event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. IFRIC 21 is effective for annual periods commencing on or after January 1, 2014. The Company is currently evaluating the impact the final standard is expected to have on its consolidated financial statements.



4.

CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS



The Company makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.  In the future, actual experience may differ from these estimates and assumptions.



The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive income/loss in the period of the change, if the change affects that period only, or in the period of the change and future periods, if the change affects both.





| |        | 
| | ------ | 
| | - 68 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



4.

CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (contd)



The key areas of judgment applied in the preparation of the consolidated financial statements that could result in a material adjustment to the carrying amounts of assets and liabilities are as follows:



a)

Where the Company holds less than 20% of the voting rights in an investment but the Company has the power to exercise significant influence through common officers and board members, such an investment is treated as an associate. The Company can exercise significant influence over Rackla Metals Inc;



b)

The determination of when an investment is impaired requires significant judgment. In making this judgment, the Company evaluates, amongst other things, the duration and extent to which the fair value of the investment is less that its original cost at each reporting period;



c)

Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Companys title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects; and



d)

The application of the Companys accounting policy for exploration and evaluation expenditure requires judgment in determining whether it is likely that future economic benefits will flow to the Company.



If, after exploration and evaluation expenditure is capitalized, information becomes available suggesting that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount, the Company carries out an impairment test at the cash generating unit or group of cash generating units level in the year the new information becomes available.



The key estimate applied in the preparation of the consolidated financial statements that could result in a material adjustment to the carrying amounts of assets and liabilities are as follows:



a)

The Company is subject to income tax in several jurisdictions and significant judgment is required in determining the provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, the company recognizes tax liabilities based on estimates of whether additional taxes and interest will be due. These tax liabilities are recognized when, despite the company's belief that its tax return positions are supportable, the company believes that certain positions are likely to be challenged and may not be fully sustained upon review by tax authorities. The company believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law.  This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact income tax expense in the period in which such determination is made.



b)

Option pricing models require the input of highly subjective assumptions, including the expected price volatility and options expected life. Changes in these assumptions can materially affect the fair value estimate and, therefore, the existing models do not necessarily provide a reliable single measure of the fair value of the Companys stock options





5.

CASH AND CASH EQUIVALENTS



Cash and cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. The Company does not hold any deposits with maturities of greater than three months from the date of acquisition. Cash at banks and on hand earns interest at floating rates based on daily bank deposit rates.





| |        | 
| | ------ | 
| | - 69 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



6.

AVAILABLE-FOR-SALE INVESTMENTS



Available-for-sale investments are recorded at fair value. As of December 31, 2013, available-for-sale investments consisted of 3,883,394 common shares of B2Gold Corp. (B2Gold) and 1,007,406 common shares of Focus Ventures Ltd. (Focus), both of which are public companies. The Company originally received 4,815,894 B2Gold shares on August 10, 2012, pursuant to the disposal of a mineral property. The Company is entitled to sell a maximum of 10% of the original number of B2Gold shares within any 30-day period without encumbrance.  If the Company wishes to exceed this limitation, there may be a delay of up to 15 days before the selling of the shares can be completed. During the year ended December 31, 2013, the Company sold 677,500 shares in B2Gold for proceeds of $2,421,814. Subsequent to December 31, 2013, the Company sold an additional 1,057,000 B2Gold shares B2Gold for proceeds of $3,350,858.  During the year ended December 31, 2013, the Company sold its holding of 34,589 common shares of Fortuna Silver Mines Inc. (Fortuna) for proceeds of $153,998.



As at December 31, 2013, the recorded amount for the available-for-sale investments was $8,687,428 (December 31, 2012: $16,550,166).  An unrealized gain, net of tax, of $517,005 was recorded in other comprehensive income/loss during the year ended December 31, 2013 (2012: $97,132; 2011: $631,891, net of tax of $79,000).



During the year ended December 31, 2013, the Company determined that the decline in value of the Focus shares was prolonged and, accordingly, recorded an impairment of $70,518.  Total impairment provisions on Focus shares as at December 31, 2013 is $556,591.  During the year ended December 31, 2013, the Company determined that the decline in value of B2Gold shares was both significant and prolonged and, accordingly, recorded an impairment of $5,863,925.  Total impairment provisions on B2Gold shares as at December 31, 2013 is $5,863,925.



The fair value of quoted securities is based on published market prices.



| |                                                                 |                   |              |               |               |                |                           |                       |               
| | --------------------------------------------------------------- | ----------------- | ------------ | ------------- | ------------- | -------------- | ------------------------- | --------------------- | --------------
| |                                                                 | B2Gold            | Focus        | Fortuna       | Rackla(1)(2)  | Cordoba(3)     | Solomon Resources Limited | Portfolio Investments | Total         
| | Balance, December 31, 2010                                      | $               - | $    523,851 | $ 37,346      | $           - | $ 300,000      | $ 132,000                 | $    1,412            | $      994,609
| | Acquisition of shares                                           | -                 | -            | 29,794        | -             | -              | 22,500                    | -                     | 52,294        
| | Transferred on distribution of assets (Note 8)                  | -                 | -            | -             | -             | (600,000)      | (48,750)                  | -                     | (648,750)     
| | Disposition of shares                                           | -                 | -            | -             | -             | -              | -                         | (1,412)               | (1,412)       
| | Impairment adjustment                                           | -                 | (465,925)    | -             | -             | -              | -                         | -                     | (465,925)     
| | Net change in fair value recorded in
other comprehensive income | -                 | 143,555      | 14,301        | 358,785       | 300,000        | (105,750)                 | -                     | 710,891       
| | Balance, December 31, 2011                                      | -                 | 201,481      | 81,441        | 358,785       | -              | -                         | -                     | 641,707       
| | Acquisition of shares                                           | 16,662,993        | -            | 50,782        | -             | -              | -                         | -                     | 16,713,775    
| | Disposition of shares                                           | (882,300)         | -            | -             | -             | -              | -                         | -                     | (882,300)     
| | Impairment adjustment                                           | -                 | (20,148)     | -             | -             | -              | -                         | -                     | (20,148)      
| | Net change in fair value recorded in
other comprehensive income | 456,090           | -            | (36,051)      | (322,907)     | -              | -                         | -                     | 97,132        
| | Balance, December 31, 2012                                      | 16,236,783        | 181,333      | 96,172        | 35,878        | -              | -                         | -                     | 16,550,166    
| | Acquisition of shares                                           | -                 | -            | 49,295        | -             | -              | -                         | -                     | 49,295        
| | Disposition of shares                                           | (2,344,150)       | -            | (150,445)     | -             | -              | -                         | -                     | (2,494,595)   
| | Impairment adjustment (Note 6)                                  | (5,863,925)       | (70,518)     | -             | -             | -              | -                         | -                     | (5,934,443)   
| | Net change in fair value recorded in
other comprehensive income | 437,091           | 110,814      | 4,978         | (35,878)      | -              | -                         | -                     | 517,005       
| | Balance, December 31, 2013                                      | $ 8,465,799       | $    221,629 | $           - | $           - | $            - | $             -           | $            -        | $   8,687,428 



(1)

The Companys holding of 7,175,700 tradable Rackla Metals Inc. (Rackla) warrants expired during the year ended December 31, 2013.

(2)

The Company also holds 9,866,376 free trading common shares of Rackla but they are recorded as an investment in associate (Note 8).

(3)

Cordoba Minerals Corp. (formerly Wesgold Minerals Inc.)





| |        | 
| | ------ | 
| | - 70 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



7.

PROPERTY AND EQUIPMENT



| |                            |                        |        |                    |                         |                       |                 |       |        |   |        |   |       |   |          | 
| | -------------------------- | ---------------------- | ------ | ------------------ | ----------------------- | --------------------- | --------------- | ----- | ------ | - | ------ | - | ----- | - | -------- | 
| |                            | Leasehold
improvements | Trucks | Computer
equipment | Furniture
and
equipment | Geophysical
equipment | Field
equipment | Total
| | Cost                       |                        |        |                    |                         |                       |                 |       |        |   |        |   |       |   |         
| | Balance, December 31, 2011 | $                      | 51,893 | $                  | 258,945                 | $                     | 242,851         | $     | 52,867 | $ | 83,594 | $ | 2,480 | $ | 692,630 
| | Additions                  |                        | 7,111  |                    | 26,095                  |                       | 5,234           |       | 9,789  |   | -      |   | -     |   | 48,229  
| | Disposals                  |                        | -      |                    | (69,402)                |                       | -               |       | -      |   | -      |   | -     |   | (69,402)
| | Balance, December 31, 2012 |                        | 59,004 |                    | 215,638                 |                       | 248,085         |       | 62,656 |   | 83,594 |   | 2,480 |   | 671,457 
| | Additions                  |                        | -      |                    | -                       |                       | 1,234           |       | -      |   | -      |   | -     |   | 1,234   
| | Balance, December 31, 2013 | $                      | 59,004 | $                  | 215,638                 | $                     | 249,319         | $     | 62,656 | $ | 83,594 | $ | 2,480 | $ | 672,691 
| |                            |                        |        |                    |                         |                       |                 |       |        |   |        |   |       |   |         
| | Accumulated amortization   |                        |        |                    |                         |                       |                 |       |        |   |        |   |       |   |         
| | Balance, December 31, 2011 | $                      | 21,647 | $                  | 189,018                 | $                     | 163,078         | $     | 23,017 | $ | 43,766 | $ | 1,004 | $ | 441,530 
| | Charge for year            |                        | 4,320  |                    | 9,951                   |                       | 24,463          |       | 6,722  |   | 7,966  |   | 443   |   | 53,865  
| | Disposals                  |                        | -      |                    | (23,544)                |                       | -               |       | -      |   | -      |   | -     |   | (23,544)
| | Balance, December 31, 2012 |                        | 25,967 |                    | 175,425                 |                       | 187,541         |       | 29,739 |   | 51,732 |   | 1,447 |   | 471,851 
| | Charge for year            |                        | 4,800  |                    | 10,157                  |                       | 19,163          |       | 6,936  |   | 6,372  |   | 310   |   | 47,738  
| | Balance, December 31, 2013 | $                      | 30,767 | $                  | 185,582                 | $                     | 206,704         | $     | 36,675 | $ | 58,104 | $ | 1,757 | $ | 519,589 
| |                            |                        |        |                    |                         |                       |                 |       |        |   |        |   |       |   |         
| | Net carrying amounts       |                        |        |                    |                         |                       |                 |       |        |   |        |   |       |   |         
| | At December 31, 2012       | $                      | 33,037 | $                  | 40,213                  | $                     | 60,544          | $     | 32,917 | $ | 31,862 | $ | 1,033 | $ | 199,606 
| | At December 31, 2013       | $                      | 28,237 | $                  | 30,056                  | $                     | 42,615          | $     | 25,981 | $ | 25,490 | $ | 723   | $ | 153,102 





| |        | 
| | ------ | 
| | - 71 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



8.

INVESTMENT IN ASSOCIATE



Spin-out transaction



Rackla was incorporated pursuant to a plan of arrangement (the Arrangement) with the Company completed on December 8, 2011.  As part of the Arrangement, a 100% interest in the Companys Yukon properties were transferred to Rackla, together with $1.0 million in cash, and available-for-sale investments consisting of 750,000 common shares of Solomon Resources Limited (Solomon) and 600,000 common shares of Cordoba.



The Arrangement resulted in the Company retaining 7,175,701 common shares and 7,175,700 share purchase warrants of Rackla, representing 19.9% of Racklas outstanding common shares and share purchase warrants in exchange for assets distributed to Rackla. Rackla meets the definition of an associate and has been equity accounted for in the consolidated financial statements. The major assets distributed to Rackla on December 8, 2011, which gave rise to a gain on distribution of $4,807,443 are as follows:



|                                                 |                  |          
|------------------------------------------------ | ---------------- | ---------
|                                                 | December 8, 2011
|Cash and cash equivalents                        | $                | 1,000,000
|Available-for-sale investments                   |                  | 648,750  
|Evaluation and exploration cost and expenditures |                  | 4,527,717
|Net assets distributed to Rackla                 | $                | 6,176,467



The fair market value of Evaluation and Exploration  cost and expenditures was comprised of $850,000 in acquisition costs one would need to pay on the Evaluation and Exploration asset to maintain its rights if owned and a multiple of 0.5 times of the $7.3 million in exploration costs incurred to date on the properties, or $3,677,717.



In accordance with IFRIC 17 Distribution of Non-Cash Assets to Owners, a gain was recognized during the year ended December 31, 2011 on the difference between the fair value and the carrying value of the net assets distributed to Rackla, calculated as follows:



|                                                  |                  |            
|------------------------------------------------- | ---------------- | -----------
|                                                  | December 8, 2011
|Fair value of common shares on distribution       | $                | 7,574,201  
|Net assets distributed to Rackla                  |                  | (6,176,467)
|Gain on distribution of assets to Rackla          |                  | 1,397,734  
|Plus: recovered expended exploration expenditures |                  | 3,409,709  
|Gain on distribution of assets to Rackla          | $                | 4,807,443  



The fair value of the common shares distributed was based on the share price of Rackla on December 9, 2011, its first day of trading, of $0.21 multiplied by the total number of the 36,067,626 shares in issue. The distribution of the 80.1% of the common shares amounting to $6,067,304 was recorded through deficit.



The gain on distribution of assets is not re-measured on changes in share price of Rackla. A total of $289,313 was expensed during the year ended December 31, 2011 in connection with this plan of arrangement.



Included in the initial fair value of investment in associate is a premium of approximately $280,000 which is the excess of the value of the investment above the fair value of the Companys share of net assets distributed to Rackla.





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| | ------ | 
| | - 72 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



8.

INVESTMENT IN ASSOCIATE (contd)



On the date the Arrangement was completed, the Company relinquished control of Rackla and recorded its retained interest in Rackla at fair value, being 19.9% of the fair value of Racklas common shares on distribution. In 2012, the Company participated in a private placement of Rackla whereby 2,690,675 units at $0.08 per unit were acquired by the Company for a total cost of $215,254. Each unit consisted of one common share and one-half warrant. Each whole warrant entitles the Company to purchase one additional common share of Rackla at $0.10, expiring October 10, 2014. With the acquisition of the 2,690,675 common shares, the Company has a 19.5% interest in Rackla as of December 31, 2013. Given the decline in the underlying quoted market price of the shares held in Rackla, an impairment charge of $855,632 was recorded in 2012.



The following table shows the continuity of the Companys interest in Rackla for the period from December 8, 2011 to December 31, 2013:



|                                                                  |   |          
|----------------------------------------------------------------- | - | ---------
|Initial fair value of investment in associate on December 8, 2011 | $ | 1,506,897
|Less: share of losses in associate                                |   | (6,250)  
|Balance, December 31, 2011                                        |   | 1,500,647
|Increase in investment                                            |   | 215,254  
|Impairment on shares held in associate                            |   | (855,632)
|Less: share of losses in associate                                |   | (366,950)
|Balance, December 31, 2012                                        |   | 493,319  
|Less: share of losses in associate                                |   | (493,318)
|Balance, December 31, 2013                                        | $ | 1        



Since the Companys share of losses in Rackla exceeds its interest, the Company has discontinued recognizing its share of further losses. The cumulative unrecognized share of losses for the associate is $361,182.



The financial statement balances of Rackla are as follows:



|                  |                   |                   |                  
|----------------- | ----------------- | ----------------- | -----------------
|                  | December 31, 2013 | December 31, 2012 | December 31, 2011
|Total assets      | $       1,221,037 | $       5,691,377 | $    6,136,475   
|Total liabilities | 36,543            | 133,734           | 60,726           
|Net loss          | 4,373,259         | 1,856,402         | 31,396           





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| | ------ | 
| | - 73 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



9.

EXPLORATION AND EVALUATION ASSETS



| |                                |           |             |        |          |   |           |   |            
| | ------------------------------ | --------- | ----------- | ------ | -------- | - | --------- | - | -----------
| | Acquisition costs              | Guatemala | Nicaragua   | Mexico | Total   
| | Balance, December 31, 2011     | $         | 4,020,864   | $      | 82,482   | $ | -         | $ | 4,103,346  
| | Disposal of mineral properties |           | (3,489,495) |        | (82,482) |   | -         |   | (3,571,977)
| | Balance, December 31, 2012     |           | 531,369     |        | -        |   | -         |   | 531,369    
| | Acquisition costs - cash       |           | -           |        | -        |   | 171,815   |   | 171,815    
| | Write-off of acquisition costs |           | -           |        | -        |   | (171,815) |   | (171,815)  
| | Balance, December 31, 2013     | $         | 531,369     | $      | -        | $ | -         | $ | 531,369    



Mexico



i)

Tlacolula Property



The Company owns a 100% interest in the Tlacolula Property which consists of one granted exploration concession covering 12,642 hectares.



By an agreement signed in September 2009 and amended in December 2012, the Company granted to Fortuna the option to earn a 60% interest in the Tlacolula Property by spending US$2 million on exploration of the Property and making staged payments totaling US$250,000 cash and US$250,000 in common stock no later than January 31, 2015 and according to the following schedule:



a)

US$20,000 cash and US$20,000 cash equivalent in shares upon regulatory approval (received);

b)

US$30,000 cash and US$30,000 cash equivalent in shares by the first year anniversary (received);

c)

US$50,000 cash and US$50,000 cash equivalent in shares by the second year anniversary (received);

d)

US$50,000 cash and US$50,000 cash equivalent in shares by the third year anniversary (received);

e)

incurring US$2 million on exploration of the Property within 12 months of receipt of a drill permit, such work to include at 1,500 metres of drilling; and

f)

US$100,000 cash and US$100,000 cash equivalent in shares within 90 days of completion of the 1,500 metres of drilling.



The Company and Fortuna have two common directors.



ii)

Santa Brigida Property



In February 2013, the Company was granted by a private exploration company (the Optionor) the option to acquire a 100% interest in the Santa Brigida property which consists of eight contiguous concessions covering 10,802 hectares located approximately 80 km ENE of the City of Guanajuato in Mexico.  In order to exercise the option, the Company had to complete the following:



a)

Pay US$160,000 to the Optionor to cover outstanding underlying property payments (paid);

b)

Complete a 3,000 metre drill program (Drill Program) on the property within 12 months of the issuance of a drill permit; and

c)

Within 90 days of completing the Drill Program, pay US$700,000 to the Optionor.



During the year ended December 31, 2013, a total of $171,815 in acquisition costs had been recorded for the Santa Brigida property.  During the year ended December 31, 2013, management decided to terminate the Companys option on the property and as a result, wrote-off the acquisition costs of $171,815.





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| | ------ | 
| | - 74 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



9.

EXPLORATION AND EVALUATION ASSETS (contd)



Guatemala



i)

Southeast Guatemala Ag-Au Epithermal Fields (formerly called Banderas)



The Companys 100% owned land holdings in southeast Guatemala as at December 31, 2013 consist of 34 concessions (three exploitation applications, 30 exploration applications, and one reconnaissance application) filed with the Guatemala Ministry of Energy and Mines covering a total of 230,489 hectares.  The three exploitation applications were filed in order to convert one previously granted exploration licence to exploitation; until the exploitation licences are granted, the granted exploration licence remains in place.



ii)

Sale of Tambor Project



In June 2008, the Company granted to Kappes, Cassiday & Associates (KCA) the option to earn a 51% interest in the Tambor gold project.



In August 2012, the Company sold its interest in its subsidiary, Exploraciones Mineras de Guatemala S.A., which holds the Tambor project, to KCA, giving KCA a 100% interest in the project.  As consideration, KCA agreed to repay approximately US$400,000 owing to the Company (US$100,000 paid upon signing and approximately US$300,000 to be paid once KCA has commenced shipment of gold produced from the property).  Also upon commercial production, KCA will make quarterly payments to the Company based on the then price of gold and the number of ounces produced from the property.



A loss on the disposal of the property totaling $3,823,118, net of costs, has been charged to the consolidated statement of comprehensive income/loss for the year ended December 31, 2012 as follows:



|                                         |   |            
|---------------------------------------- | - | -----------
|Proceeds of disposition                  | $ | 98,750     
|Less:                                    |   |            
|Carrying value of mineral property       |   | (3,489,495)
|Transaction costs                        |   | (2,645)    
|Write-off of amount receivable           |   | (429,728)  
|Net loss on disposal of mineral property | $ | (3,823,118)



Due to the uncertainty of receiving future production payments from KCA, the Company wrote-off a receivable balance of $5,890 (2012: $429,728; 2011: $Nil) and has not recognized a contingent gain on potential royalty payments.  Future payments from KCA, whether as a royalty or repayment of the outstanding receivable balance, will be recorded as revenue at such time they are virtually certain to be received, which was the position as at December 31, 2013. As of December 31, 2013, future payments from KCA remain uncertain.



iii)

Geothermal Permits



In 2010, the Company submitted applications for provisional use permits for a number of geothermal systems in Guatemala. As of December 31, 2013 all applications have expired.



iv)

Regional Exploration



During 2013, 2012 and 2011, the Company conducted property investigation work on other prospective properties.





| |        | 
| | ------ | 
| | - 75 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



9.

EXPLORATION AND EVALUATION ASSETS (contd)



Nicaragua



i)

Sale to B2Gold



Based on a previous option agreement with the Company, B2Gold earned in 2012 a 60% interest in the Companys Trebol and Pavon gold properties in Nicaragua by expending a total of US$4 million on exploration, resulting in B2Gold and the Company holding 60% and 40%, respectively, of the rights and obligations to a joint venture.  On April 5, 2012 the Company and B2Gold entered into a binding letter agreement pursuant to which B2Gold agreed, among other things, to acquire a 100% interest in the Trebol and Pavon properties. On August 10, 2012 the sale was completed with the Company receiving consideration of 4,815,894 common shares of B2Gold, with a fair value of $16,662,993 at the time of issuance.  In addition, B2Gold has agreed to make contingent payments to the Company of US$10 per ounce of gold on 40% of any proven and probable mineral reserves outlined at the Trebol property in excess of 500,000 ounces (on a 100% basis).



In connection with the sale, B2Gold and the Company terminated all other aspects of the existing option and joint venture arrangements entered into between the parties in respect of the Trebol, Pavon and San Jose exploration properties.



During the year ended December 31, 2012, the Company recorded a gain on the sale to B2Gold of $16,278,410, net of costs, as follows:



|                                         |   |           
|---------------------------------------- | - | ----------
|Proceeds of disposition                  | $ | 16,662,993
|Less:                                    |   |           
|Carrying value of mineral property       |   | (82,482)  
|Transaction costs                        |   | (302,101) 
|Net gain on disposal of mineral property | $ | 16,278,410



ii)

Joint Venture Properties



As of the completion of the property sale described above, B2Gold and the Company entered into a joint venture agreement with respect to each of the Companys San Jose and B2Golds La Magnolia properties in Nicaragua to jointly explore the properties with B2Gold and the Company owning 60% and 40%, respectively, of the rights and obligations of each joint venture.  As of December 31, 2013, there have been no expenditures accrued or paid by the Company relating to this joint venture.



Canada (Properties distributed to Rackla- Note 8)



Pursuant to the Arrangement, on December 8, 2011, the Company assigned to Rackla all of its rights and obligations relating to its previously held Yukon and Alaska properties. During the year ended December 31, 2012, total exploration and evaluation asset acquisition costs were reduced by $1,118,008 and were recorded as a distribution to Rackla.





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| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



10.

COMMITMENT



The Company has entered into operating lease agreements for its office premises. The Company also rents space to other companies related by common directors and officers on a month to month basis, the amounts of which are netted against rental expense; however, there are no commitments from these companies and thus the amounts presented below are the gross commitments.  The annual commitments under the leases are as follows:



|     |   |          
|---- | - | ---------
|2014 | $ | 298,506  
|2015 |   | 300,998  
|2016 |   | 225,690  
|2017 |   | 190,608  
|2018 |   | 190,608  
|2019 |   | 190,608  
|     | $ | 1,397,018



For the year ended December 31, 2013, the Company received a total of $247,294 (2012: $235,454; 2011: $184,675) from those companies it rents space to.





11.

SHARE CAPITAL AND RESERVES



a)

Common Shares



The Company is authorized to issue an unlimited number of common shares without par value.



Fiscal 2013 and 2012



There was no share capital activity during the years ended December 31, 2013 and 2012.



Fiscal 2011



During the year ended December 31, 2011, as part of option payments relating to portions of the Sixty Mile Property, the Company issued 34,246 shares on May 11, 2011 and 100,266 shares on August 16, 2011. The Company issued 25,000 shares on July 27, 2011 as part of the option payments due on the Rivier Property.



On July 4, 2011, the Company closed a private placement of 6,100,000 units at $0.60 per unit for gross proceeds of $3,660,000.  The proceeds on the sale of units are allocated all to share capital and none to warrants, based on a residual method approach to assigning proceeds to warrants. The Company paid $52,350 cash, 199,250 units and 286,499 warrants as finders fees in connection with the financing.  Each private placement unit consists of one common share and one-half of a share purchase warrant.  The 99,624 warrants issued as part of the finders fee units and the additional 286,499 warrants issued as finders fees entitle the holder to purchase an additional common share exercisable for one year at a price of $0.75.  The fair value of the 286,499 finders fee warrants was $33,261 and was recorded as share issuance costs and an offset to other equity reserve.  The fair value of each finders fee warrant has been estimated as of the date of the issuance using the Black-Scholes pricing model with the following assumptions: risk-free interest rate of 1.24%, dividend yield of 0%, volatility of 79% and expected life of one year.



During the year ended December 31, 2011, 105,000 stock options were exercised for gross proceeds of $37,250.  The Company reallocated the fair value of these options previously recorded in the amount of $33,213 from other equity reserve to capital stock.



During the year ended December 31, 2011, 384,316 share purchase warrants were exercised for gross proceeds of $195,448. The Company reallocated the fair value of those share purchase warrants previously recorded in the amount of $22,252 from other equity reserve to capital stock.





| |        | 
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| | - 77 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



11.

SHARE CAPITAL AND RESERVES (contd)



b)

Share Purchase Warrants



The following is a summary of changes in warrants from January 1, 2011 to December 31, 2013:



|                                                                              |                    |                                
|----------------------------------------------------------------------------- | ------------------ | -------------------------------
|                                                                              | Number of warrants | Weighted average exercise price
|Balance, December 31, 2010                                                    | 7,689,696          | $0.51                          
|Expired                                                                       | (500,766)          | $0.55                          
|Issued                                                                        | 3,436,123          | $0.75                          
|Exercised (1)                                                                 | (384,316)          | $0.51                          
|Balance, December 31, 2011                                                    | 10,240,737         | $0.59                          
|Expired                                                                       | (905,736)          | $0.49                          
|Balance, December 31, 2012                                                    | 9,335,001          | $0.43                          
|Expired                                                                       | (9,335,001)        | $0.43                          
|Balance, December 31, 2013                                                    | -                  | -                              
|                                                                             
|(1)The average share price was $0.72 at the time the warrants were exercised.



As at December 31, 2013, no share purchase warrants were outstanding.



c)

Nature and Purpose of Equity and Reserves



The reserves recorded in equity on the Companys balance sheet include Other equity reserve, Deficit and Accumulated Other Comprehensive Loss/Income.



Other equity reserve is used to recognize the value of stock option grants and share purchase warrants prior to exercise. The value of stock option and share purchase warrants that are forfeited or expire unexercised is not removed from other equity reserve.



Deficit is used to record the Companys change in deficit from earnings from period to period.



Accumulated other comprehensive loss/income comprises of available-for-sale reserve. This reserve is used to recognize fair value changes on available-for-sale investments.





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| | - 78 - | 
| |        | 
| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



12.

SHARE-BASED PAYMENTS



a)

Option Plan Details



The Company has a formal stock option plan in accordance with the policies of the TSX Venture Exchange (TSX-V) under which it is authorized to grant options up to 10% of its outstanding shares to officers, directors, employees and consultants. The exercise price of each option is not less than the closing market price of the Companys stock on the trading day prior to the date of grant. Options granted to investor relations personnel vest in accordance with TSX-V regulation. The options are for a maximum term of ten years.



The following is a summary of changes in options for the year ended December 31, 2013:



| |                                 |              |                |                 |                 |           |                     |                 |                       
| | ------------------------------- | ------------ | -------------- | --------------- | --------------- | --------- | ------------------- | --------------- | ----------------------
| |                                 |              |                |                 | During the year |           |                    
| | Grant date                      | Expiry date  | Exercise price | Opening balance | Granted         | Exercised | Forfeited / expired | Closing
balance | Vested and exercisable
| | May 06, 2008                    | May 05, 2013 | $0.26          | 575,000         | -               | -         | (575,000)           | -               | -                     
| | Jan 08, 2010                    | Jan 07, 2020 | $0.29          | 1,570,000       | -               | -         | -                   | 1,570,000       | 1,570,000             
| | May 26, 2010                    | May 25, 2020 | $0.36          | 100,000         | -               | -         | -                   | 100,000         | 100,000               
| | Sep 24, 2010                    | Sep 23, 2020 | $0.69          | 820,000         | -               | -         | -                   | 820,000         | 820,000               
| | Jul 27, 2011                    | Jul 26, 2021 | $0.81          | 290,000         | -               | -         | -                   | 290,000         | 290,000               
| | Dec 13, 2012                    | Dec 12, 2022 | $0.20          | 2,255,000       | -               | -         | (120,000)           | 2,135,000       | 2,135,000             
| |                                 |              |                | 5,610,000       | -               | -         | (695,000)           | 4,915,000       | 4,915,000             
| | Weighted average exercise price | $0.34        | -              | -               | $0.25           | $0.35     | $0.35              



The following is a summary of changes in options for the year ended December 31, 2012:



| |                                 |              |                |                 |                 |           |                     |                 |                       
| | ------------------------------- | ------------ | -------------- | --------------- | --------------- | --------- | ------------------- | --------------- | ----------------------
| |                                 |              |                |                 | During the year |           |                    
| | Grant date                      | Expiry date  | Exercise price | Opening balance | Granted         | Exercised | Forfeited / expired | Closing
balance | Vested and exercisable
| | Apr 17, 2007                    | Apr 16, 2012 | $0.52          | 565,000         | -               | -         | (565,000)           | -               | -                     
| | Sep 06, 2007                    | Sep 05, 2012 | $0.56          | 850,000         | -               | -         | (850,000)           | -               | -                     
| | May 06, 2008                    | May 05, 2013 | $0.26          | 575,000         | -               | -         | -                   | 575,000         | 575,000               
| | Jan 08, 2010                    | Jan 07, 2020 | $0.29          | 1,595,000       | -               | -         | (25,000)            | 1,570,000       | 1,570,000             
| | May 26, 2010                    | May 25, 2020 | $0.36          | 100,000         | -               | -         | -                   | 100,000         | 100,000               
| | Sep 24, 2010                    | Sep 23, 2020 | $0.69          | 1,570,000       | -               | -         | (750,000)           | 820,000         | 820,000               
| | Nov 18, 2010                    | Nov 17, 2020 | $0.69          | 75,000          | -               | -         | (75,000)            | -               | -                     
| | Jul 04, 2011                    | Jul 03, 2021 | $0.60          | 55,000          | -               | -         | (55,000)            | -               | -                     
| | Jul 27, 2011                    | Jul 26, 2021 | $0.81          | 320,000         | -               | -         | (30,000)            | 290,000         | 290,000               
| | Dec 13, 2012                    | Dec 12, 2022 | $0.20          | -               | 2,255,000       | -         | -                   | 2,255,000       | 2,255,000             
| |                                 |              |                | 5,705,000       | 2,255,000       | -         | (2,350,000)         | 5,610,000       | 5,610,000             
| | Weighted average exercise price | $0.50        | $0.20          | -               | $0.60           | $0.34     | $0.34              





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| | - 79 - | 
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Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



12.

SHARE-BASED PAYMENTS (contd)



a)

Option Plan Details  (contd)



The following is a summary of changes in options for the year ended December 31, 2011:



| |                                 |              |                |                 |                 |           |                     |                 |                       
| | ------------------------------- | ------------ | -------------- | --------------- | --------------- | --------- | ------------------- | --------------- | ----------------------
| |                                 |              |                |                 | During the year |           |                    
| | Grant date                      | Expiry date  | Exercise price | Opening balance | Granted         | Exercised | Forfeited / expired | Closing
balance | Vested and exercisable
| | Feb 22, 2006                    | Feb 21, 2011 | $0.70          | 1,110,000       | -               | -         | (1,110,000)         | -               | -                     
| | Apr 17, 2007                    | Apr 16, 2012 | $0.52          | 595,000         | -               | -         | (30,000)            | 565,000         | 565,000               
| | Sep 06, 2007                    | Sep 5, 2012  | $0.56          | 850,000         | -               | -         | -                   | 850,000         | 850,000               
| | May 06, 2008                    | May 5, 2013  | $0.26          | 615,000         | -               | (40,000)  | -                   | 575,000         | 575,000               
| | Jan 08, 2010                    | Jan 7, 2020  | $0.29          | 1,640,000       | -               | (45,000)  | -                   | 1,595,000       | 1,595,000             
| | May 26, 2010                    | May 25, 2020 | $0.36          | 100,000         | -               | -         | -                   | 100,000         | 100,000               
| | Sep 24, 2010                    | Sep 23, 2020 | $0.69          | 1,620,000       | -               | (20,000)  | (30,000)            | 1,570,000       | 1,570,000             
| | Nov 18, 2010                    | Nov 17, 2020 | $0.69          | 75,000          | -               | -         | -                   | 75,000          | 75,000                
| | Jul 04, 2011                    | Jul 3, 2021  | $0.60          | -               | 55,000          | -         | -                   | 55,000          | 55,000                
| | Jul 27, 2011                    | Jul 26, 2021 | $0.81          | -               | 320,000         | -         | -                   | 320,000         | 320,000               
| |                                 |              |                | 6,605,000       | 375,000         | (105,000) | (1,170,000)         | 5,705,000       | 5,705,000             
| | Weighted average exercise price | $0.52        | $0.78          | $0.35           | $0.70           | $0.50     | $0.50              



There were no options exercised during the years ended December 31, 2013 and 2012. The average share price at the time the options were exercised during the year ended December 31, 2011 was $0.80.



b)

Fair Value of Options Issued During the Year



There were no options granted during the year ended December 31, 2013. The weighted average fair value at grant date of options granted during the years ended December 31, 2012 and 2011was $0.17 per option and $0.67 per option respectively.



The weighted average remaining contractual life of the options outstanding at December 31, 2013 is 7.51 years.



Options Issued to Employees



The fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.



Options Issued to Non-Employees



Options issued to non-employees are measured based on the fair value of the goods or services received, at the date of receiving those goods or services. If the fair value of the goods or services received cannot be estimated reliably, the options are measured by determining the fair value of the options granted using the Black-Scholes option pricing model.





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Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



12.

SHARE-BASED PAYMENTS (contd)



b)

Fair Value of Options Issued During the Year  (contd)



The model inputs for options granted during the years ended December 31, 2012 and 2011 included:



| |            |             |                           |                |                         |               |                   |               
| | ---------- | ----------- | ------------------------- | -------------- | ----------------------- | ------------- | ----------------- | --------------
| | Grant
date | Expiry date | Share price at grant date | Exercise price | Risk-free interest rate | Expected
life | Volatility
factor | Dividend yield
| | 12/13/12   | 12/12/22    | $0.20                     | $0.20          | 1.80%                   | 10 years      | 89%               | 0%            
| | 07/27/11   | 07/26/21    | $0.81                     | $0.81          | 2.88%                   | 10 years      | 90%               | 0%            
| | 07/04/11   | 07/03/21    | $0.55                     | $0.60          | 3.08%                   | 10 years      | 89%               | 0%            



The expected volatility is based on the historical volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information. The risk free rate of return is the yield on a zero-coupon Canadian Treasury Bill of a term consistent with the assumed option life. The expected average option term is the average expected period to exercise, based on the historical activity patterns for each individually vesting tranche.



c)

Expenses Arising from Share-based Payment Transactions



Total expenses arising from the share-based payment transactions recognized during the year as part of share-based compensation expense were $Nil (2012: $385,320; 2011: $306,915).



As of December 31, 2013, 2012, and 2011 there was no amount of total unrecognized compensation cost related to unvested share-based compensation awards.



d)

Amounts Capitalized Arising from Share-based Payment Transactions



Total expenses arising from the share-based payment transactions that were capitalized during the year as part of exploration and evaluation asset acquisition costs were $Nil (2012: $Nil; 2011: $119,700).





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Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



13.

INCOME TAXES



Taxation in the Company and its subsidiaries operational jurisdictions is calculated at the rates prevailing in the respective jurisdictions.



The difference between tax expense for the year and the expected income taxes based on the statutory tax rate arises as follows:



| |                                                                                      |                          |                          |                  
| | ------------------------------------------------------------------------------------ | ------------------------ | ------------------------ | -----------------
| |                                                                                      | December 31,
2013        | December 31,
2012        | December 31,
2011
| | Income (loss) before income taxes                                                    | $       (8,287,763)      | $       8,929,357        | $    (3,350,056) 
| | Tax charge/(recovery) based on the statutory
rate of 25.75% (2012: 25%; 2011: 26.5%) | (2,134,000)              | 2,232,000                | (888,000)        
| | Non-deductible expenses                                                              | 277,000                  | 190,000                  | (1,095,000)      
| | Different tax rates in other jurisdictions                                           | 91,000                   | (3,172,000)              | 298,000          
| | Non-taxable portion of capital gains                                                 | 892,000                  | 150,000                  | (555,000)        
| | Reduction in statutory rate                                                          | (82,000)                 | -                        | -                
| | Flow-through shares renunciation                                                     | -                        | -                        | 449,000          
| | Spin out impact                                                                      | -                        | -                        | 1,250,000        
| | Initial recognition exemption and other                                              | 8,000                    | 197,000                  | (67,000)         
| | Changes in unrecognized deferred tax assets                                          | 948,000                  | 403,000                  | (108,000)        
| | Total income tax expense / (recovery)                                                | $                      - | $                      - | $       (716,000)



Effective April 1, 2013, the Canadian Federal corporate tax rate remained at 15% and the British Columbia provincial tax rate increased from 10% to 11%.



The tax rate of 0.0% represents the federal statutory rate applicable for the 2013 taxation year for the Cayman Islands, 30.0% for Mexico, 5.0% for Guatemala and 30.0% for Nicaragua.



No deferred tax asset has been recognized in respect of the following losses and temporary differences as it is not considered probable that sufficient future taxable profit will allow the deferred tax asset to be recovered:



| |                                        |                        |                       
| | -------------------------------------- | ---------------------- | ----------------------
| |                                        | December 31,
2013      | December 31,
2012     
| | Loss carry forwards                    | $       1,066,000      | $        907,000      
| | Property and equipment                 | 119,000                | 105,000               
| | Mineral properties                     | 604,000                | 571,000               
| | Available-for-sale investments         | 705,000                | -                     
| | Other deductible temporary differences | 167,000                | 130,000               
| | Unrecognized tax assets                | (2,661,000)            | (1,713,000)           
| |                                        | $                    - | $                    -



As at December 31, 2013, the Company has estimated non-capital losses for Canadian income tax purposes that may be carried forward to reduce taxable income derived in future years.



Non-capital Canadian tax losses expiring as follows:



|               |                 
|-------------- | ----------------
|Year of expiry | Taxable losses  
|2026           | $        108,000
|2027           | $     1,009,000 
|2028           | $        653,000
|2030           | $        832,000
|2032           | $     1,091,000 
|2033           | $        432,000
|Total          | $     4,125,000 





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Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



14.

RELATED PARTY TRANSACTIONS



The Companys related parties with transactions during the year ended December 31, 2013 consist of directors, officers and companies with common directors as follows:



| |                                                                        |                                           
| | ---------------------------------------------------------------------- | ------------------------------------------
| | Related Party                                                          | Nature of Transactions                    
| | Mill Street Services Ltd. (Mill Street)                              | Management fees                           
| | Gold Group Management Inc. (Gold Group)                              | Shared general and administrative expenses
| | Rackla Metals Inc. (Rackla) (Associate)                              | Shared general and administrative expenses
| | Fortuna Silver Mines Inc. (Fortuna)                                  | Shared general and administrative expenses
| | Focus Ventures Ltd. (Focus)                                          | Shared general and administrative expenses
| | Medgold Resources Corp. (Medgold) (formerly
Emerick Resources Corp.) | Shared general and administrative expenses
| | Western Pacific Resources Corp. (Western Pacific)                    | Shared general and administrative expenses
| | Cordoba Minerals Corp. (Cordoba)                                     | Shared general and administrative expenses
| | Voyager Gold Corp. (Voyager)                                         | Shared general and administrative expenses



In addition to related party transactions disclosed elsewhere in the consolidated financial statements (Note 8 and 9), the Company incurred the following expenditures charged by non-key management officers and companies which have common directors with the Company in the years ended December 31, 2013, 2012, and 2011:



|                        |                      |                      |                 
|----------------------- | -------------------- | -------------------- | ----------------
|                        | 2013                 | 2012                 | 2011            
|Expenses:               |                      |                      |                 
|Consulting              | $                  - | $                  - | $         10,000
|Salaries and benefits   | 15,969               | 34,488               | 23,014          
|Mineral property costs: |                      |                      |                 
|Salaries and benefits   | 42,354               | 76,979               | 62,650          
|                        | $         58,323     | $       111,467      | $         95,664



Effective July 1, 2012, the Company reimburses Gold Group, a company controlled by the Chief Executive Officer of the Company, for shared administrative costs and other business related expenses paid by Gold Group on behalf of the Company.  During the years ended December 31, 2013 and 2012, the Company reimbursed Gold Group the following:



|                                     |                   |                     
|------------------------------------ | ----------------- | --------------------
|                                     | 2013              | 2012                
|General and administrative expenses: |                   |                     
|Communications                       | $           8,552 | $          5,690    
|Consulting fees                      | 3,000             | -                   
|Office and miscellaneous             | 37,753            | 12,987              
|Property investigations              | 31,260            | -                   
|Public relations                     | 3,963             | 4,048               
|Repair and maintenance               | -                 | 11,151              
|Salaries and benefits                | 246,469           | 10,707              
|Transfer agent and regulatory fees   | 3,110             | -                   
|Travel and accommodation             | 17,304            | 18,949              
|                                     | $       351,411   | $        63,532     
|Exploration expenditures             | $         59,333  | $                  -



There were no transactions with Gold Group for the year ended December 31, 2011.



These transactions are in the normal course of operations and are measured at the fair value of the services rendered.





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| |        | 





Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



14.

RELATED PARTY TRANSACTIONS  (contd)



Long-term deposits include an amount of $60,000 (December 31, 2012: Prepaid expenses and deposits: $60,000) paid to Gold Group as a deposit on the shared office and administrative services agreement that became effective July 1, 2012.



Due from related parties of $33,817 (December 31, 2012: $116,947) are amounts due from companies which have a common director with the Company and arose from shared administrative costs. These amounts are unsecured, non-interest bearing and are due on demand.



Accounts payable and accrued liabilities include $31,369 payable to Gold Group for shared administrative costs (December 31, 2012: $85,380) and $7,500 to Mill Street, a company controlled by the Chief Executive Officer of the Company, for management fees (December 31, 2012: $Nil).



Key management compensation



Key management personnel are persons responsible for planning, directing and controlling the activities of an entity, and include certain directors and officers. Key management compensation comprises:



|                            |                 |                 |                 
|--------------------------- | --------------- | --------------- | ----------------
|                            | 2013            | 2012            | 2011            
|Management fees             | $        79,500 | $       141,000 | $         60,000
|Salaries, benefits and fees | 119,743         | 105,429         | 71,141          
|Share-based payments        | -               | 92,271          | -               
|                            | $      199,243  | $       338,700 | $       131,141 



Total share-based payments to directors not specified as key management personnel during the year ended December 31, 2013 was $Nil (2012: $81,165; 2011: $105,128).





15.

SEGMENTED INFORMATION



Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. All of the Companys operations are within the mining sector relating to precious metals exploration. Due to the geographic and political diversity, the Companys exploration operations are decentralized whereby exploration managers are responsible for business results and regional corporate offices provide support to the exploration programs in addressing local and regional issues. The Companys operations are therefore segmented on a district basis. The Companys assets are located in Canada, Guatemala, Nicaragua, Caymans and Mexico. Details of identifiable assets by geographic segments are as follows:



| |                                               |                    |               |                |               |                    |               
| | --------------------------------------------- | ------------------ | ------------- | -------------- | ------------- | ------------------ | --------------
| | Year ended December 31, 2013                  | Canada             | Guatemala     | Nicaragua      | Mexico        | Other              | Consolidated  
| | Exploration expenditures                      | $                - | $     478,760 | $       30,081 | $     530,468 | $                - | $    1,039,309
| | Exploration and evaluation assets
written off | -                  | -             | -              | 171,815       | -                  | 171,815       
| | Investment income                             | 22,141             | -             | -              | -             | -                  | 22,141        
| | Amortization                                  | 34,298             | 12,758        | 682            | -             | -                  | 47,738        
| | Loss before income taxes                      | (6,901,127)        | (641,786)     | (35,519)       | (681,204)     | (28,127)           | (8,287,763)   
| | Capital expenditures*                         | -                  | 1,234         | -              | 171,815       | -                  | 173,049       





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Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



15.

SEGMENTED INFORMATION  (contd)



| |                                                                                                             |                         |                  |                    |                    |                    |  |  |  | 
| | ----------------------------------------------------------------------------------------------------------- | ----------------------- | ---------------- | ------------------ | ------------------ | ------------------ |  |  |  | 
| |                                                                                                             |                         |                  |                    |                    |                   
| | Year ended December 31, 2012                                                                                | Canada                  | Guatemala        | Nicaragua          | Other              | Consolidated      
| | Exploration expenditures                                                                                    | $                     - | $        794,388 | $           17,406 | $           73,172 | $         884,966 
| | Interest income                                                                                             | 8,883                   | -                | -                  | -                  | 8,883             
| | Amortization                                                                                                | 41,125                  | 10,964           | 1,776              | -                  | 53,865            
| | Profit/(loss) before income taxes                                                                           | (2,779,050)             | (4,442,082)      | (450,324)          | 16,600,813         | 8,929,357         
| | Capital expenditures*                                                                                       | 19,670                  | 28,559           | -                  | -                  | 48,229            
| |                                                                                                             |                         |                  |                    |                    |                   
| |                                                                                                             |                         |                  |                    |                    |                   
| | Year ended December 31, 2011                                                                                | Canada                  | Guatemala        | Nicaragua          | Other              | Consolidated      
| | Exploration expenditures                                                                                    | $      4,954,479        | $     1,387,041  | $           29,899 | $           18,634 | $        6,390,053
| | Exploration and evaluation assets
Distributed (Note 8)                                                      | 1,118,008               | -                | -                  | -                  | 1,118,008         
| | Interest income                                                                                             | 61,397                  | -                | -                  | -                  | 61,397            
| | Amortization                                                                                                | 44,119                  | 5,304            | 6,803              | 2,108              | 58,334            
| | Loss before income taxes                                                                                    | (1,491,668)             | (1,423,545)      | (33,034)           | (401,809)          | (3,350,056)       
| | Capital expenditures*                                                                                       | 471,788                 | 29,748           | -                  | -                  | 501,536           
| |                                                                                                             |                         |                  |                    |                    |                   
| | *Capital expenditures consists of additions of property and equipment and exploration and evaluation assets



| |                          |                |                 |                  |                    |                    |                
| | ------------------------ | -------------- | --------------- | ---------------- | ------------------ | ------------------ | ---------------
| | As at December 31, 2013  | Canada         | Guatemala       | Nicaragua        | Mexico             | Other              | Consolidated   
| | Total current assets     | $10,116,791    | $       53,207  | $         9,968  | $       32,223     | $     288,544      | $  10,500,733  
| | Total non-current assets | 248,029        | 566,034         | 5,032            | -                  | -                  | 819,095        
| | Total assets             | $10,364,820    | $     619,241   | $       15,000   | $       32,223     | $     288,544      | $  11,319,828  
| | Total liabilities        | $       93,762 | $         1,529 | $         2,178  | $         5,586    | $                4 | $       103,059
| |                          |                |                 |                  |                    |                    |                
| |                          |                |                 |                  |                    |                    |                
| | As at December 31, 2012  | Canada         | Guatemala       | Nicaragua        | Mexico             | Other              | Consolidated   
| | Total current assets     | $17,505,772    | $       82,082  | $         9,441  | $                - | $     347,616      | $  17,944,911  
| | Total non-current assets | 713,276        | 578,152         | 6,489            | -                  | -                  | 1,297,917      
| | Total assets             | $18,219,048    | $     660,234   | $       15,930   | $                - | $     347,616      | $  19,242,828  
| | Total liabilities        | $     223,111  | $       20,272  | $            660 | $                - | $       11,258     | $       255,301





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Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



16.

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT



The Company is exposed to the following financial risks:



·

Market Risk

·

Credit Risk

·

Liquidity Risk



In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments.  This note describes the Companys objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.



General Objectives, Policies and Processes



The Board of Directors has overall responsibility for the determination of the Companys risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Companys finance function. The Board of Directors receive periodic reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.



The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Companys competitiveness and flexibility.  Further details regarding these policies are set out below.



a)

Market Risk



Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices are comprised of three types of risk: foreign currency risk, interest rate risk, and equity price risk.



Foreign Currency Risk



Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to fluctuations in foreign currencies through its operations in foreign countries.  The Company monitors this exposure, but has no hedge positions. As at December 31, 2013, cash totalling $68,059 (December 31, 2012: $191,445) was held in US dollars, $694 (December 31, 2012: $741) in Nicaragua Cordoba, $4,213 (December 31, 2012: $4,706) in Guatemala Quetzal, $690 (December 31, 2012: $5,476) in Mexican Pesos and $709 (December 31, 2012: $715) in Peruvian Sols. Based on the above net exposures at December 31, 2013, a 10% depreciation or appreciation of the above currencies against the Canadian dollar would approximately result in a $7,400 increase or decrease in the Companys after tax net earnings.



Interest Rate Risk



Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates.  The Company does not have any borrowings. Interest rate risk is limited to potential decreases on the interest rate offered on cash held with chartered Canadian financial institutions. The Company considers this risk to be limited as it holds no assets or liabilities subject to variable rates of interest.



Equity Price Risk



Equity price risk is the uncertainty associated with the valuation of assets arising from changes in equity markets.  The Companys available-for-sale investments are exposed to significant equity price risk due to the potentially volatile and speculative nature of the businesses in which the investments are held. The available-for-sale investments held in B2Gold and Focus are monitored by the Board with decisions on sale taken by Management.  A 10% decrease in fair value of the shares would approximately result in an $869,000 decrease in equity.





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Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



16.

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (contd)



b)

Credit Risk



Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Companys credit risk is primarily attributable to its cash and cash equivalents, available-for-sale investments and advances and other receivables. The Company limits exposure to credit risk by maintaining its cash and cash equivalents with large financial institutions. The Company does not have cash and cash equivalents or available-for-sale investments that are invested in asset based commercial paper. For advances and other receivables, the Company estimates, on a continuing basis, the probable losses and provides a provision for losses based on the estimated realizable value.



c)

Liquidity Risk



Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Companys approach to managing liquidity risk is to provide reasonable assurance that it will have sufficient funds to meet liabilities when due. The Company manages its liquidity risk by forecasting cash flows required by operations and anticipated investing and financing activities.  At December 31, 2013, the Company had working capital of $10.4 million (December 31, 2012: $17.7 million) available to apply against short-term business requirements. All of the Companys financial liabilities have contractual maturities of less than 45 days and are subject to normal trade terms.



Determination of Fair value



Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.



The Statement of Financial Position carrying amounts for cash, due from related parties, advances and other receivables, deposits, accounts payables and accrued liabilities, and due to related parties approximates fair value due to their short-term nature. Due to the use of subjective judgments and uncertainties in the determination of fair values these values should not be interpreted as being realizable in an immediate settlement of the financial instruments.



Fair Value Hierarchy



Financial instruments that are measured subsequent to initial recognition at fair value are grouped in Levels 1 to 3 based on the degree to which the fair value is observable:



| |         |  |                                                                                                                                                                                     
| | ------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Level 1 |  | Unadjusted quoted prices in active markets for identical assets or liabilities;                                                                                                     
| | Level 2 |  | Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
| | Level 3 |  | Inputs for the asset or liability that are not based on observable market data (unobservable inputs).                                                                               



The available-for-sale investments for B2Gold and Focus are based on quoted prices and are therefore considered to be Level 1.



There were no transfers between Levels in the year.





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Radius Gold Inc.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2013

(Expressed in Canadian Dollars)



17.

CAPITAL MANAGEMENT



The Companys objectives when managing capital are to safeguard the Companys ability to continue as a going concern in order to advance its mineral properties. In order to facilitate the management of its capital requirements, the Company prepares periodic budgets that are updated as necessary. The Company manages its capital structure and makes adjustments to it to effectively support the acquisition and exploration of mineral properties. The properties in which the Company currently has an interest are in the exploration stage; as such the Company is dependent on external financing to fund its activities. In order to carry out the planned exploration and pay for general administrative costs, the Company will spend its existing working capital and raise additional amounts as needed. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.



Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company monitors its cash, available-for-sale investments, common shares, warrants and stock options as capital. There were no changes in the Companys approach to capital management during the year ended December 31, 2013. The Companys investment policy is to hold cash in interest bearing bank accounts, which pay comparable interest rates to highly liquid short-term interest bearing investments with maturities of one year or less and which can be liquidated at any time without penalties. Neither the Company nor its subsidiaries are subject to externally imposed capital requirements and do not have exposure to asset-backed commercial paper or similar products. The Company expects its current capital resources to be sufficient to carry out its planned exploration programs and operating costs for the next twelve months.





18.

CHANGE IN PRESENTATION



The Company has reclassified certain prior period expenses to conform to the current year presentation of expenses.





19.

EVENTS AFTER THE REPORTING DATE



Subsequent to December 31, 2013, the following events which have not been disclosed elsewhere in these consolidated financial statements have occurred:



·

The Company entered into a strategic alliance agreement with Medgold whereby the Company will have the right to option one of Medgolds properties in Portugal. As well, the Company agreed to participate in a private placement in Medgold that closed subsequent to the year end in the amount of $500,000. For a period of eighteen months, the Company may select one of the Medgolds Portuguese properties in which the Company will be granted the option to earn a 51% interest by spending $3,000,000 on exploration and development of that property.  Upon exercise of the option, a joint venture will be formed between Medgold and the Company to further develop the property.





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SIGNATURE PAGE



Pursuant to the requirements of Section 12g of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.





Dated: May 7, 2014

By  /s/ Simon Ridgway

Simon Ridgway,

Chief Executive Officer







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